Directive No. SBB/12/1996 LIMITATION ON INVESTMENT OF BANKS These directives are issued by the National Bank of Ethiopia pursuant to
LICENSING AND SUPERVISION OF BANKING BUSINESS -Ethiopian National Bank Directives
the authority vested in it by Article 41 of the Monetary and Banking Proclamation
No. 83/1994 and by article 36 of the Licensing and Supervision of Banking
Proclamation No. 84/1994.
1. No bank shall engage in insurance business but may hold up to 20% in an
insurance company and up to a total of 10% of the banks equity capital in such business.
2. Banks are prohibited from engaging directly in non-banking businesses such as agriculture, industry, and commerce.
3. A bank may hold shares in a non-banking business only up to 20% of the
company’s share capital and total holdings in such business shall not
exceed10% of the bank’s net worth.
4. A bank’s equity participation in another bank shall be subject to prior
authorization by National Bank of Ethiopia.
5. No bank shall commit more than 20% of its net worth in real estate acquisition and development other than for own business premises with out prior approval of the National Bank of Ethiopia.
6. A bank may not invest more than 10 %(ten percent) of its net worth in other securities.
7. The aggregate sum of all investments at any one time (excluding investment in government securities) may not exceed 50% of the bank’s net worth, with out
prior approval by the National Bank of Ethiopia.
8. Dealing in securities shall be done by banks only through a limited liability
subsidiary company wherein the holding of the bank shall not exceed 10% (ten percent) of its equity capital.
These Directives shall enter into force as of 8th day of April 1996.