Addis Ababa, December 30, 2024 (FMC) – The Commercial Bank of Ethiopia (CBE) is gearing up for a more competitive banking landscape as Ethiopia prepares to welcome foreign banks, Bank’s President Abe Sano said.
The recent enactment of the Banking Business Proclamation by the House of Peoples’ Representatives paves the way for opening the banking sector to foreign investment.
This proclamation establishes a legal framework enabling foreign banks and investors to participate in the sector and contribute to the nation’s continued economic growth.
The bill is designed to ensure adequate financial resources and bolster foreign currency reserves, modernize the banking sector through advanced knowledge and technology, strengthen its integration with the global market, and enhance its overall competitiveness and efficiency.
In anticipation of this new landscape, the CBE has undertaken necessary preparations to compete effectively with foreign banks entering the Ethiopian banking sector.
Mr. Abe said the Bank has prioritized enhancing its capital base, modernizing its technological infrastructure, and streamlining its operational systems to compete with established international banks.
Regarding the bank’s capital, Abe acknowledged previous challenges stemming from delayed loan repayments, particularly concerning large-scale projects, which adversely affected the bank’s balance sheet. However, he emphasized that concerted efforts have been made to rectify this situation, adding the government’s significant intervention in providing the CBE with a 900 billion Birr bond to bolster its capital.
This measure has increased the bank’s capital by over 50 percent of its previous level, Abe told local news agency ENA.
Furthermore, following the macroeconomic reforms, the bank anticipates receiving 650 million USD in support from the World Bank, which will significantly contribute to strengthening its capital position and overall capacity.
To ensure the CBE’s competitiveness with foreign banks, the bank has implemented advanced technological systems, including robust and efficient digital infrastructure.
Abe explained that while the CBE previously faced liquidity challenges, the newly implemented international treasury management system has transformed the bank into a provider of liquidity even for other banks facing shortages.
Concurrently, enhancements to the loan management system have yielded positive results. The CBE is also restructuring its branches across the country to improve efficiency and profitability, including a branch consolidation initiative.
Abe Sano affirmed that these ongoing reforms, including the capital increase and operational enhancements, will position the Commercial Bank of Ethiopia for effective competition and success in the evolving banking landscape.