The National Bank of Ethiopia (NBE) is drafting a directive that tightens the required qualifications of bank presidents and vice presidents and the criteria to be board of directors.
The draft directive that is expected to be implemented in the current fiscal year aims to boost the trust of the public on the fast growing banking service.
According to the draft document that the central bank discussed with the officials of banks in the past few months, the required qualification of bank presidents and vice presidents will increase, while board of directors who would like to be included on the administration would be required to have further educational background than the current requirement to complete twelfth grade (for quarter of the members).
For the private banks one of the major challenges is hiring top bank leaders since the NBE standard is very stern. NBE is a responsible body to give the final green light for the proposed candidates of bank presidents.
The new directive expects potential bank president (CEO) to have at least 12 years of experience in the banking industry, of which, five are in a vice presidency position.
The current directive, SBB/54/2012, issued in 2012 states that the bank CEO shall have a minimum of 10 years experience in the banking, of which, at least 5 are in a managerial or directorial position.
On the other hand the draft directive has also strengthened the qualifications for vice presidents (VP). It is expected that the directive would put the VP to have a minimum of ten years experience of which five are on directorial or managerial position.
On the current directive issued in 2012 stated that senior executive officers shall have a minimum of 8 years experience in the banking of which at a minimum 4 are in managerial position.
Experts in the industry said that the drafted directive will make it more difficult to hire top managements of the bank. “The directive that currently exists has made assigning a president very hard, while this directive makes it even harder” experts told Capital.
The central bank is also expected to change article 5 sub article 5.1 of the directive SSB/54/2012 titled ‘requirements for persons with significant influence in a bank’. The sub article that mentions the board of directors would be changed according to the draft document.
The change requires all of the board of directors to have a minimum of first degree. The existing directive, SBB/54/2012 , states that at least 75 percent of members of the board of directors shall hold a minimum of first degree and the remaining board members, at a minimum shall complete general secondary school.