The National Bank of Ethiopia (NBE) on its draft directive of requirements for licensing and renewal of banking business and representative has authorized that any foreign bank applying to operate in the country must show confirmation that it has been rated at least BBB- (or BAA equivalent) by leading global agencies, including Standard & Poor’s, Fitch or Moody’s.
According to Moody’s rating B rated banks possess strong intrinsic financial strength while Standard & Poor’s rating of “BBB” is the equivalent of a Moody’s “BAA”, indicating the banks have adequate capacity to meet financial commitments, which is also similar with Fitch’s rating. The draft directive also indicated that only financially strong, investment-grade-rated banks will be eligible to enter the market.
Foreign banks must also demonstrate strong financial standing, consolidated supervision, compliance with Basel capital and liquidity standards, and flawless record of international operations.
Beyond creditworthiness, applicants are required to present detailed business plans, governance structures, and risk management frameworks tailored to Ethiopian operations. The foreign banks should also disclose ownership structures, their sources of capital, and undergo restrictions preventing simultaneous operation of both deposit-taking and non-deposit-taking branches in Ethiopia.
The directive further outlines fee structures, requiring foreign bank subsidiaries and branches to pay 200,000 birr in investigation fees and 600,000 birr in licensing fees, with renewal fees set at 400,000 birr.
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