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[ HISTORY OF BANKING - NATIONAL BANK ]

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The agreement that was reached in 1905 between Emperor Minilik II and Following the declaration of socialism in 1974 the government extended
Mr.Ma Gillivray, representative of the British owned National Bank of its control over the whole economy and nationalized all large
Egypt marked the introduction of modern banking in Ethiopia. Following corporations. Organizational setups were taken in order to create
the agreement, the first bank called Bank of Abysinia was inaugurated in stronger institutions by merging those that perform similar functions.
Feb.16, 1906 by the Emperor. The Bank was totally managed by the Accordingly, the three private owned banks, Addis Ababa Bank, Banco di
Egyptian National Bank and the following rights and concessions were Roma and Banco di Napoli Merged in 1976 to form the second largest
agreed upon the establishment of Bank of Abyssinia:- Bank in Ethiopia called Addis Bank with a capital of Eth. birr 20 million
and had a staff of 480 and 34 branches. Before the merger, the foreign
The capital of the Bank was agreed to be Pound Sterling 500,000 and participation of these banks was first nationalized in early 1975. Then
one-fifth was subscribed and the rest was to be obtained by selling Addis Bank and Commercial Bank of Ethiopia S.C . were merged by
shares in some important cities such as London, Paris and New York. proclamation No.184 of August 2, 1980 to form the sole commercial bank
in the country till the establishment of private commercial banks in 1994.
The Bank was given full rights to issue bank notes and monitor coins
The Commercial Bank of Ethiopia commenced its operation with a capital
which were to be legal tender and all the profits there from a ruing to
of Birr 65 million, 128 branches and 3,633 employees. The Savings and
the bank and freely exchangeable against gold and silver on cover by
Mortgage Corporation S. . and Imperial Saving and Home Ownership
the Bank as well as to establish silver coins and abolish the Maria
Public Association were also merged to form the Housing and Saving
Theresa.
Bank with working capital of Birr 6.0 million and all rights, privileges,
Land was given to the Bank free of charges & permitted to build offices assets and liabilities were transferred by proclamation No.60, 1975 to the
and warehouses. Government and public funds were to be deposited new bank.Proclamation No.99 of 1976 brought into existence the
with the bank and all payments to be made by checks. Agricultural and Industrial Bank, which was formed in 1970 as a 100
The government promised not to allow any bank to be established in percent state ownership, was brought under the umbrella of the National
the country within the 50-year concession period. Bank of Ethiopia. Then it was reestablished by proclamation No. 158 of
1979 as a public finance agency possessing judicial personality and
named Agricultural and Industrial Development Bank (AIDB). It was
Within the first fifteen years of its operation, Bank of Abyssinia opened
branches in different areas of the country. In 1906 a branch in Harar entrusted with the financing of the economic development of the
(Eastern Ethiopia) was opened at the same time of the inauguration of agricultural, industrial and other sectors of the national economy
Bank of Abyssinia in Addis Ababa. Another at Dire Dawa was opened two extending credits of medium and long-term nature as well as short-term
years later and at Gore in 1912 and at Dessie and Djibouti in 1920. Mac agricultural production loans.The financial sector that the socialist
Gillivray, the then representative and negotiator of Bank of Egypt, was oriented government left behind constituted only 3 banks and each
appointed to be the governor of the new bank and he was succeeded by enjoying monopoly in its respective market. The following was the
H Goldie, Miles Backhouse, and CS Collier were in change from 1919 until structure of the sector at the end of the era.
the Bank’s liquidation in 1931.
The National Bank of Ethiopia (NBE)
The society at that time being new for the banking service, Bank of The Commercial Bank of Ethiopia (CBE)
Abyssinia had faced difficulty of familiarizing the public with it. It had also
Agricultural and Industrial Development Bank (AIDB)
need to meet considerable cost of installation and the costly journeys by
its administrative personnel. As a result, despite its monopolistic position,
Following the demise of the Dergue regime in 1991 that ruled the country
the Bank earned no profit until 1914. Profits were recorded in 1919, 1920
for 17 years under the rule of command economy, the EPRDF declared a
and from 1924 onwards.
liberal economy system. In line with this, Monetary and Banking
proclamation of 1994 established the national bank of Ethiopia as a
Generally, in its short period of existence, Bank of Abyssinia had been
judicial entity, separated from the government and outlined its main
carrying out limited business such as keeping government accounts,
function.
some export financing and undertaking various tasks for the government.
Moreover, the Bank faced enormous pressure for being inefficient and
purely profit motivated and reached an agreement to abandon its
operation and be liquidated in order to disengage banking from foreign Monetary and Banking proclamation No.83/1994 and the Licensing and
control and to make the institution responsible to Ethiopia’s credit needs. Supervision of Banking Business No.84/1994 laid down the legal basis for
Thus by 1931 Bank of Abyssinia was legally replaced by Bank of Ethiopia investment in the banking sector. Consequently shortly after the
shortly after Emperor Haile Selassie came to power. proclamation the first private bank, Awash International Bank was
established in 1994 by 486 shareholders and by 1998 the authorized
The new Bank, Bank of Ethiopia, was a purely Ethiopian institution and capital of the Bank reached Birr 50.0 million. Dashen Bank was
was the first indigenous bank in Africa and established by an official established on September 20,1995 as a share company with an
decree on August 29, 1931 with capital of £750,000. Bank of Egypt was authorized and subscribed capital of Birr 50.0 million. 131 shareholders
willing to abandon its on cessionary rights in return for a payment of with subscribed and authorized capital of 25.0 million and 50 million
Pound Sterling 40,000 and the transfer of ownership took place very founded bank of Abysinia. Wegagen Bank with an authorized capital of
smoothly and the offices and personnel of the Bank Of Abyssinia Birr 60.0 million started operation in 1997. The fifth private bank, United
including its manager, Mr. Collier, being retained by the new Bank. Bank was established on 10th September 1998 by 335 shareholders .Nib
Ethiopian government owned 60 percent of the total shares of the Bank International Bank that started operation on May 26, 1999 with an
and all transactions were subject to scrutiny by its Minister of Finance. authorized capital of Birr 150.0 million. Cooperative Bank of Oromia was
established on October 29,2004 with an authorized capital of Birr 22.0
Bank of Ethiopia took over the commercial activities of the Bank of million. Lion International Bank with an authorized capital of Birr 108
Abysinia and was authorized to issue notes and coins. The Bank with million started operation in October 02,2006. Zemen Bank that started
branches in Dire Dawa, Gore, Dessie, Debre Tabor, Harar, agency in operation on June 17, 2008 with an authorized capital of Birr 87.0 million.
Gambella and a transit office in Djibouti continued successfully until the The last bank to be established to date is Oromia International Bank that
Italian invasion in 1935. During the invasion, the Italians established started operation on September 18, 2008 with an authorized capital of
branches of their main Banks namely Banca d’Italia, Banco di Roma, Birr 91 million.
Banco di Napoli and Banca Nazionale del lavoro and started operation in
the main towns of Ethiopia. However, they all ceased operation soon On the other hand, modern forms of insurance service, which were
after liberation except Banco di Roma and Banco di Napoli which introduced in Ethiopia by Europeans, trace their origin as far back as 1905
remained in Asmara. In 1941 another foreign bank, Barclays Bank, came when the Bank of Abysinia began to transact fire and marine insurance as
to Ethiopia with the British troops and organized banking services in an agent of a foreign insurance company. According to a survey made in
Addis Ababa, until its withdrawal in 1943. Then on 15th April 1943, the 1954, there were 9 insurance companies that were providing insurance
State Bank of Ethiopia commenced full operation after 8 months of service in the country. Except Imperial Insurance company that was
preparatory activities. It acted as the central Bank of Ethiopia and had a established in 1951, the rest of the insurance companies were branches
power to issue bank notes and coins as the agent of the Ministry of or agents of foreign companies. The number of insurance companies
Finance. In 1945 and 1949 the Bank was granted the sole right of issuing increased significantly and reached 33 in 1960. At that time insurance
currency and deal in foreign currency. The Bank also functioned as the business like any business undertaking was classified as trade and was
principal commercial bank in the country and engaged in all commercial administered by the provisions of the commercial code. This was the only
banking activities. legislation in force in respect of insurance except the maritime code of
Ethiopia that was issued to govern the operations of maritime business
The State Bank of Ethiopia had established 21 branches including a and the related marine insurance. The minimum paid-up capital required
branch in Khartoum, Sudan and a transit office on Djibouti until it eased to establish an insurance company was as little as 12,500 Ethiopian
to exist by bank proclamation issued on December, 1963. Then the dollars as stipulated in the commercial code. There was no restriction on
Ethiopian Monetary and Banking law that came into force in 1963 foreign insurers.
separated the function of commercial and central banking creating
National Bank of Ethiopia and commercial Bank of Ethiopia. Moreover it The first remarkable event that the Ethiopian insurance market witnessed
allowed foreign banks to operate in Ethiopia limiting their maximum was the promulgation of proclamation No. 281/1970. This proclamation
ownership to be 49 percent while the remaining balance should be was issued to provide for the control & regulation of insurance business
owned by Ethiopians. in Ethiopia. It is peculiar in that it created an Insurance Council and an
Insurance Controller’s Office.
The National Bank of Ethiopia with more power and duties started its
operation in January 1964. Following the incorporation as a share The controller of insurance licensed 15 domestic insurance companies,
company on December 16, 1963 as per proclamation No.207/1955 of 36 agents, 7 brokers, 3 actuaries & 11 assessors in accordance with the
October 1963, Commercial Bank of Ethiopia took over the commercial provisions of the proclamation immediately in the year after the issuance
banking activities of the former State Bank of Ethiopia. It started of the law.
operation on January 1,1964 with a capital of Eth. Birr 20 million. In the
new Commercial Bank of Ethiopia, in contrast with the former State Bank The law required an insurer to be a domestic company whose share
of Ethiopia, all employees were Ethiopians. capital (fully subscribed) to be not less than Ethiopian dollars 400,000 for
a general insurance business and Ethiopian dollars 600,000 in the case of
There were two other banks in operation namely Banco di Roma S. . and long-term insurance business and Ethiopian dollars 1,000,000 to do both
Bank o di Napoli S.C. that later reapplied for license according to the new long-term & general insurance business. Non-Ethiopian nationals were
proclamation each having a paidup capital of Eth. Birr 2 million. not barred from participating in insurance business. However, the
proclamation defined ‘domestic company’ as a share company having its
The first privately owned bank, Addis Ababa Bank share company, was head office in Ethiopia and in the case of a company transacting a general
established on Ethiopians initiative and started operation in 1964 with a insurance business at least 51% and in the case of a company transacting
capital of 2 million in association with National and Grindlay Bank, life insurance business, at least 30% of the paid-up capital must be held
London which had 40 percent of the total share. In 1968, the original by Ethiopian nationals or national companies.
capital of the Bank rose to 5.0 million and until it ceased operation, it had
300 staff at 26 branches. Four years after the enactment of the proclamation, the military
government that came to power in 1974 put an end to all private
entrepreneurship. Then all insurance companies operating were
nationalized and from January 1, 1975 onwards the government took
There were other financial institutions operating in the country like the over the ownership and control of these companies & merged them into
Imperial Savings and Home Ownership public Association (ISHOPA) which a single unit called Ethiopian Insurance Corporation. In the years
specialized in providing loans for the construction of residential houses following nationalization, Ethiopian Insurance Corporation be came the
and to individuals under the guarantee of their savings. There was also sole operator.
the Saving and Mortgage Corporation of Ethiopia whose aims and duties
were to accept savings and trust deposits account and provide loans for Following the change in the political environment in 1991, the
the construction, repair and improvement of residential houses, proclamation for the licensing and supervision of insurance business
commercial and industrial buildings and carry out all activities related to heralded the beginning of a new era. Immediately after the enactment of
mortgage operations. On the other hand, there was a bank called the proclamation private insurance companies began to flourish.
Agricultural Bank that provides loan for the agricultural and other Currently There are 16 private banks and 3 government-owned banks, 19
relevant projects established in 1945. But in 1951 the Investment Bank of private and 1 government owned insurance companies, and 35 MFIs (as
Ethiopia replaced it. In 1965, the name of the bank once again hanged to of May,2012.)
Ethiopian Investment Corporation Share Company and the capital raised
to Eth. Birr 20 million, which was fully paid up. However, proclamation
No.55 of 1970 established the Agricultural and Industrial Development
Bank Share Company by taking over the asset and liability of the former
Development Bank and Investment Corporation of Ethiopia.

QUICK INFORMATION

-- Foreign Currency Reg. Form -- Consolidated Forex services

The National Bank of Ethiopia was established in
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operation in January 1964. Prior to this -- Establishment Operation Forex -- Financial Inclusion Strategy
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