National Bank of Ethiopia (NBE) is working on a plan to forcibly merge local Ethiopian banks. The decision is being taken ahead of the entry of foreign banks in the Ethiopian banking industry.
National Bank of Ethiopia Governor Mamo Mihret disclosed that locals banks will have to be merged. He said Ethiopian banks are in trouble and the main purpose behind mergers is to rescue Ethiopian banks.
Ethiopian House of People’s Representatives recently approved Banking Act which provides for bank mergers. Detailed guidelines will be released in coming days.
Ethiopian Prime Minister last year announced that instead of many small banks, Ethiopia should have a few strong big banks. Local banks last year, in a petition to the National Bank of Ethiopia, expressed their concerns against forcible measures to merge them.
Ethiopian government last year liberalized foreign exchange, retail, import, export and several other sectors of economy. Banking sectors is about to be liberalizing. According to Ethiopian government officials, Ethiopian banks, if not merged, won’t be able to be competitive to the foreign banks which are due to enter Ethiopian market.
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