Ahadu Bank would be the first to bring up the merger and acquisition topic at the general assembly, which is scheduled for next week. According to the National Bank of Ethiopia (NBE), the merger case would be resolved by legislation.
Despite the unsuitable site, the bank, which started operations in July 2022, reported that it ended the previous fiscal year with favorable results.
Ahadu has taken the initiative to explore the possibilities in response to the government’s heavy push for Ethiopian banks to merge in order to create a small number of powerful financial enterprises.
According to Anteneh Sebsibe, the chairperson of the board of directors of one of Ethiopia’s newest banks, his bank has engaged an overseas consulting firm to investigate potential mergers.
Anteneh, a former top executive of a large bank, stated that he does not agree with the prevailing views that some experts encourage bank mergers in general.
“While it is comparative reasoning, it may not be the case that we have numerous banks. Certain small banks will have a distinct primary business,” he informed Capital.
However, Ahadu has engaged a consultant to find out where it is, how and where it should go, and what the possibilities are in response to the rising recommendation that banks be consolidated.
The preliminary research that will be presented at the next general assembly has been completed by the consultant.
He asserts that “shareholders should be psychologically prepared about the future of the bank” and that “I think we are the pioneers to discuss the issue openly with shareholders.”
The opinions of shareholders will be useful in conducting further research to ascertain the bank’s future.
Anteneh stated that the firm had extensive experience with comparable issues worldwide, notwithstanding his refusal to reveal the identity of the foreign consultant.
According to the board chair, “the second phase, which is the in-depth study, will be launched this year as per further recommendations that will be given by the general assembly.”
He did, however, assert with confidence that his bank would be able to satisfy the required paid-up capital within the time limit that NBE, the central bank, had established.
Anteneh said that newly established financial firms are impacted by the central bank policy that restricts new lending.
“We concluded the fiscal year that ended in June with encouraging results and profit, despite the market’s unsuitability,” he said.
The law that is being prepared would address the merger and acquisition issue, NBE Governor Mamo Esmelealem Mihretu told Capital.
He said the law will be issued very soon, but he would not provide specifics.
Regarding the financial sector’s anticipated openness at the start of the upcoming year, the Prime Minister and other government officials have on several occasions urged banks to unite in order to create a small number of powerful institutions.
