One of Ethiopia’s oldest and wealthiest commercial banks has halted its lending operations, marking a significant development in the country’s financial landscape.
The decision comes amidst various procedures undertaken by the bank for loan disbursement, with reports indicating that even those already approved for loans are affected by the suspension.
According to sources, customers who had been granted loan approval and were awaiting disbursement have been informed of the temporary suspension.
Expressing their frustration, one such customer, preferring anonymity, recounted their experience of having their loan put on hold just as they were anticipating its release.
Another customer shared a similar ordeal, having met all prerequisites for a substantial loan only to be informed by the branch manager of the suspension.
The directive to halt loans reportedly came into effect on April 3, 2024, yet the bank has refrained from publicly disclosing the rationale behind this decision.
Notably, as a government-owned entity, this commercial bank stands as Ethiopia’s sole institution with loans and savings exceeding one trillion birr.
The bank had previously disclosed a substantial loss of 801 million birr due to a system error resulting from a recent system update.
In response, efforts were made to recover the lost funds, with the bank’s president, Abe Sano, announcing the successful retrieval of 400 million birr.
As part of the refund process, the bank has been showcasing images of customers allegedly involved in the illegal money transfer across its branches.
Uncertainty looms over whether the suspension of loan disbursement is still in effect or has been lifted.
The Commercial Bank of Ethiopia, as revealed in its annual report, disbursed 151 billion birr in loans last year, alongside collecting 165.3 billion birr in savings.
However, the current fiscal year seems to present challenges, with savings collection falling significantly below projections, attributed in part to security concerns and conflicts in various regions.
Speculation arises regarding the rationale behind the bank’s decision, with some attributing it to the challenges in mobilizing sufficient funds from savings and loan services due to security-related issues.
As one of the largest banks in Ethiopia, the Commercial Bank of Ethiopia operates nationwide, providing essential financial services across the country.
The bank’s president has affirmed its substantial financial standing, with total deposits surpassing one trillion birr, equivalent to over $18.5 billion, underscoring its significant role in Ethiopia’s economy.
Ethiopia’s economy faces multiple challenges, including the impact of war, debt burden, COVID-19 pandemic, climate change, rising living costs, and global economic conditions.
