The Herald said the move against Air Bagan by banks comes as the Singaporean Government maintains that the best way forward is through United Nations-sponsored dialogue with the regime to achieve national reconciliation, rather than economic sanctions.

Mr Tay Za, the managing director of Htoo Trading Company, which owns a controlling share in Air Bagan, is also named on a financial sanctions list of 'persons benefiting from government economic policies' released by the Australian Government this week.

Singapore has been under pressure internationally to sever business ties with Myanmar's military regime since its deadly crackdown on monks and civilian protesters late last month.

In Yangon on Sunday, there was a renewed troop presence on the streets downtown and close to the Shwedagon Pagoda. The show of force seemed aimed at forestalling any protests to mark the one-month anniversary of the bloodshed, in which at least 13 people died and thousands were detained.

Myanmar is ranked 50th among Singapore's trading partners, with a total annual trade of $1 billion, and Asean, of which Singapore holds the rotating chairmanship, had limited economic leverage.

The Herald said the banking cold shoulder had an immediate impact on Air Bagan, which told bulk ticket sellers in Singapore in a leaked e-mail on Wednesday: 'The final blow has come today, when we were informed our banks in Singapore will no longer deal with us for the time being.'

The airline had been hit earlier in the week by US Government sanctions on three companies in Singapore that are linked to the 43-year-old tycoon Tay Za, including Air Bagan Holdings.

Ms Jois Teo, the senior ticketing agent with the Singaporean travel company Euro-Asia Holidays, confirmed Air Bagan had told agents all flights would be suspended from Nov 4.