By Yonas Abiye |

Addis Ababa (The Reporter)―All branches of the recently engulfed Construction and Business Bank (CBB) are scheduled to reopen doors as branches of its new owner, the mammoth Commercial Bank of Ethiopia (CBE), on April 4, 2016.

It was last year in December that the government of Ethiopia had decided to merge the two state-owned banks upon the endorsement of decision by the Councils of Ministers. It was also noted that CBE’s takeover of its ailing sibling is a sign that the government want to see more merger and consolidation in the banking industry pending the stiff competition that local banks would face one decision to open the sector for foreign investment is passed.

Migration of the customer base and the institutional data of the former CBB to the central data system of CBE are expected to be completed by today, according to timetable announced by the latter.

To undertake the data migration processing, all the 170 branches of the dissolving CBB were closed yesterday and they are expected remains closed today, CBE’s head of Corporate Communication, Efrem Mekuriya, told The Reporter.

According to Efrem, the transferring of data is expected to be completed today as relevant employees of the bank are now working on it to enable all the branches to open their doors for service as CBE’s newly added branches on Monday.

The transferring process is being done in all branches; thus, the acquisition will bring the number of branches of CBE to a total of 1,170 throughout the country and South Sudan. Recently, CBE has also announced that it will be opening more branches outside of Ethiopia including Dubai and USA.

Last year, Director General of Public Financial Enterprises Supervisory Agency (PFESA), Sintayehu Woldemichael (PhD), told journalists while announcing the merger that the decision was made because the two banks are engaged in similar activities.

According to the Director, the decision also intended at creating a strong bank that help boost Ethiopia’s economic growth. He further argued at the time that the move has nothing to do with the weak performance of the bank. In fact, he went ahead and argued that in the past six years CBB has shown quite the transformation in the area of branch expansion and investment in technology. Especially, he made reference to the big leap in terms of branch expansion that the bank has made

Towards its last days, CBB’s performance showed observably downward trend. One indication of the grave financial condition that bank was in was the 21.3 million birr gross profit which the bank has posted during the first six-month operations of the financial year 2014/15.

This performance was a disappointing 76 percent lower than the target it set for the period. Furthermore, the figure is also 40.3 percent less compared with the same period in the previous year.

In the fiscal year 2014/15, CBB’s loan disbursement performance failed short of the previous year’s performance by some 38.2 percent, with a potential to adversely affect the bank’s outstanding loan growth in the coming years, banks own document read at the time.

The bank’s non-performing loan (NPL) basket as well climbed by 16.5 percent during the period in question, rising to 3.7 percent, significantly above the industry average which is below three percent. After setting aside for reserves, commitments, undrawn loan balances, pending capital expenditure, the bank’s cash on hand stood at 791 million birr compelling the bank to focus on short term loans only.

Construction and Business Bank SC (CBB) was a wholly government–owned public enterprise and successor of the Housing and Savings Bank (HSB) which was formed in 1975 through the merger of two financial institutions namely, Imperial Savings and Home Ownership Association, and Savings and Mortgage Corporation of Ethiopia which were nationalized at the on-set of the socialist era of Ethiopia.

Source: The Reporter
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