ANZ has announced it will pull out of Myanmar, dealing a blow to the country's military junta and potentially ramping up pressure on other overseas banks to turn their backs on the regime.
In a brief statement issued on Tuesday afternoon, the major Australian bank said it would cease its Myanmar operations by early next year "subject to local regulatory approval".
The move has been welcomed by activists who took aim at ANZ earlier this month after leaked records showed the bank had facilitated at least a handful of payments that foreign companies hold with a military-controlled bank in Myanmar.
ANZ said it had been facing "increasing operational complexity" in Myanmar over the past several months, and was "working with its institutional customers to transition to alternative banking arrangements".
"The decision follows careful consideration of the local operating conditions," said ANZ's international managing director, Simon Ireland.
"We thank the team for working tirelessly to support our customers during this time.
"Our international network and supporting the trade and capital flows of our customers around the region is a critical part of our strategy, and will continue to be for the long term."
ANZ doesn't have a huge presence in Myanmar, with a small team of around two dozen local staff in the country.
Still, it's one of the first major overseas financial institution to leave Myanmar, and the decision means by early next year no substantial Western banks will remain in the country.
Multinational companies who bank with ANZ and operate in the country will now have to find an alternative at a time when the junta is grappling with US-led sanctions.
Civil society groups will also hope that the announcement will help ramp up pressure on other banks – including institutions based in Singapore and Japan – to announce they will also withdraw from the country.
A host of other multinationals – including Telenor and energy giant Woodside — have already announced they're leaving Myanmar in the wake of the military coup that ousted Aung San Suu Kyi's government in February last year.
Myanmar has also been increasingly turning towards Russian banks for finance as it grows more isolated from Western financial institutions.
ANZ facilitated deposits into military-owned bank
The announcement comes after it was revealed that ANZ facilitated deposits for international companies into accounts they hold with Innwa Bank – which is owned by a military conglomerate, the Myanmar Economic Corporation (MEC).
The United States, the United Kingdom and the European Union have all imposed sanctions on the MEC as part of a broader attempt to financially isolate the military junta, but Australia has yet to do the same.
The transactions totalled around $5,000 and were paid on behalf of a Malaysian telco infrastructure provider edotco, and a Hong Kong based insurer AIA.
The bank said at the time the transactions were made in Myanmar's local currency rather than US dollars, and it said it would be "misleading and deceptive" to suggest it breached sanctions.
But activists said dealing with the Innwa Bank – which plays a crucial role in helping the junta access the international financial system and fund military controlled businesses – was still morally inexcusable.
Justice For Myanmar spokesperson Yadanar Maung said the group "cautiously welcomed" ANZ's decision and called on the company to "responsibly exit" the country.
"This must involve mitigating and remedying the impact on their staff and ensuring that they repatriate all funds so they do not leave a windfall for the terrorist military junta," she said.
"ANZ is the first international bank to leave Myanmar and their planned exit is another sign of the destruction the junta is causing to Myanmar's economy through their coup attempt, war of terror and proliferation of illicit business activities under control of, or profiting the military, and its associates."
Ms Maung also said ANZ's past record highlighted the need for Australia to hit the junta with fresh sanctions.
"Since the military's illegal attempted coup, ANZ has transacted with the US, UK and EU sanctioned Innwa Bank and facilitated customer payments to the military junta, enabled by the refusal of the Australian government to sanction the junta and its businesses," she said.
"The Australian government's appalling inaction in response to the crisis in Myanmar undermines its democratic values and international obligations."
Human Rights Watch Asia director Elaine Pearson said ANZ's announcement was "welcome" but also "underscores why targeted sanctions by the Australian government are more than just 'virtue signalling'."
"The lack of targeted sanctions by the Australian government has reportedly enabled Australian companies to continue to do business with junta-controlled entities that have been sanctioned by other governments," she said.
"Sean Turnell is out now, so the Australian government should stop dragging its feet and act in the interests of the people of Myanmar.
"The Myanmar junta will not end its brutality unless there is a strong coordinated effort to impose financial pressure on junta-controlled entities."
