Construction Bank merges with Commercial Bank


Construction and Business Bank (CBB) and Commercial Bank of Ethiopia (CBE) merged this week, the later engulfing the former to form a mighty government owned financial institution, with combined asset of over 318.5 billion birr.
Sentayehu Wolde-Michael (PhD), Director of Public Financial Enterprises Agency, announced on December 22 that creating a mega financial institution is the main reason that prompted the affiliation.
“In a short time, we will roll out the hierarchical strata the new bank will be governed by. But for the time being, all the assets, staff and loans of the two banks will be administered by one body,” he said.
The director made clear that the merger will not affect employees of CBB, who will continue to receive their previous entitlements including current salaries, allowances and responsibilities.
“We decided to affiliate the banks after a thorough research to get better service out of the banks,” Sentayehu said.
The merger is a direct result of recommendations from government sponsored research looking to restructuring the development bank, CBE and the Ethiopian Insurance Corporation under one umbrella organization.
Refuting widespread rumors that the merger took place mainly because the CBB has registered weak performance in the past six consecutive years, Sentayehu said, “As far as we know, CBB has been registering a remarkable performance after it applied Business Process Reengineering (BPR). Its branches increased from 33 to 120, that shows that it is performing better.”
Sentayehu also said that CBB borrowers would be served by CBE on the basis of previous agreements they made with CBB.
The merger has received both positive and negative views. Critics argue that the existence of Construction and Business Bank as an independent financial player was important to its autonomous operation. They further criticize that the incorporation did not follow the provisions enshrined in the trade regulation.
The construction bank, established in 1965, has assets worth over 7.6 billon birr and 1,993 permanent staff. The much larger commercial bank had 310.9 billion birr in assets, and over 30,000 workers in 992 branches around the country at the time of the merger.