Hawassa Bank, still under formation, has requested that National Bank of Ethiopia transfer of equity contributions of shareholders to Berhan International Bank. The promoters for Hawassa decided on the merger with Berhan following the increase in capital requirement for banks by the central bank last September.
Berhan Bank is more active and its management has agree to work on the merger in good faith said Solomon Afework, Promoter of Hawassa Bank.
A Memorandum of Understanding for a merger was signed a month ago but the move was rejected by the National Bank which stated that such a merger between a bank still under formation and one that is already established is not allowed in Ethiopian law according to Solomon.
The NBE doesnot recognize Hawassa as a bank and hence it cannot fulfill the most significant requirement for a merger explained an official with the central bank.The National bank advised that Hawassa bank should be formally liquidated formally and shareholders can proceed to buy shares in Berhan bank in their individual capacities. Hawassa bank promoters however countered by asking the central bank to transfer the equity contributions of shareholders to the closed account of Berhan Bank held at the NBE.
There is no regulation in the books prohibiting the transfer of equity in the suffested manner but the bank cannot approve the move of without the full consent of shareholder claimed the official.
Hawassa promoters prepared a petition from a majority shareholders and requested the bank to approve the equity transfer.
Source: Addis Fortune
