The Commercial Bank of Ethiopia (CBE) suspended its plans to open a new branch in Khartoum, following border clashes between Sudan and Ethiopia. The state bank left its office in Khartoum, as the political tension between the two countries started to escalate since last year.
“We rented an office in Khartoum and was about to inaugurate a subsidiary branch there. But we suspended it due to the situation with Sudan. It is pending after concluding it is unwise to open a branch in Khartoum at this time,” Muluneh Aboyeh, Risk and Compliance Vice President at CBE, told The Reporter.
Apart from the remittance from diaspora’s in Sudan, the subsidiary branch initially targeted facilitating trade between the two countries. The National Bank of Ethiopia (NBE) agreed with the central bank of Sudan to use the branch for currency swapping, a mechanism devised to trade without the need to pay in USD.
Facing a political strife internally, Sudan and Ethiopia have been in a border dispute for a year now. Despite the involvements military power of both countries on the ground, in border areas in western Ethiopia, the two countries officials still hope to unwind the impasse peacefully.
CBE is the first local bank to open branches outside Ethiopia and the suspended one should have been the third subsidiary branch next to south Sudan and Djibouti.
The bank is currently planning to open similar subsidiary branches in other countries where larger number of Ethiopian diaspora’s reside.
“Beginning this year, we will start opening new branches to serve the Ethiopian diaspora abroad,” said Emebet Melese, Reform and Transformation project office VP at the CBE.
With 35 million bank accounts, CBE has the largest customer base among all financial institutions in Ethiopia, where less than a third of the population is banked. Its total assets now stand at 1.1 trillion Br.
The CBE decided to reduce its branch expansions, after a new five year strategy was introduced. The bank opened only 98 branches last year, down from up to 300 branches it used to open per year. Its branches reached 1,920, out of the total 7,262 branch networks. Last year, the eighteen banks opened 844 new branches.
In fact, CBE’s 234 branches were affected by the war in northern Ethiopia. While its branch in Tigray and Afar remained closed, a few in Amhara Region have resumed operation, according to Muluneh.
“The new strategy shows our cost of resource mobilization is very expensive. The biggest bank in Nigeria operates only with 700 branches. So, we decided to hold our pace in branch expansions. In fact, we have reached most parts of Ethiopia. We will open new branches only in new woredas and business areas,” added Emebet.