Berhan Bank has become the third in the industry to make a change of guard this year following the central bank's approval of Girum Tsegaye's nomination last month.

Girum, 50, will serve as the Bank's third president since its incorporation in 2009 with a paid-up capital of 154.7 million Br.

A father of four, Girum did his undergraduate studies in management and a postgraduate in business administration, both at the Addis Abeba University. He has nearly 30 years of experience in banking, starting as a clerk with the Commercial Bank of Ethiopia (CBE). He had served the CBE for 11 years, eventually becoming a division manager.

Later, he joined Hibret Bank (then United Bank) as the human resources and finance departments manager. He served at Hibret for 14 years. Girum was the founding Chief Executive Officer (CEO) of Ethio Lease, the first privately owned equipment leasing company in Ethiopia. Following two years at the helm of Ethio Lease, Girum returned to Hibret Bank and assumed the position of vice president for strategy and marketing.

Earlier this month, regulators at the National Bank of Ethiopia (NBE) have approved his nomination to head Berhan Bank. He was selected following a three-month recruitment process carried out by an 11-member board of directors under the chairmanship of Gumachew Kussie. Two other candidates were in the running, including Bethlehem Getachew, who served as Berhan's acting president since last November.

She assumed the position following the departure of former President Abraham Alero in October 2021. Abraham held the top job for seven years before relinquishing his role for "personal reasons". Bethlehem had served as a vice president at Berhan for close to four years before succeeding Abraham.

“She didn’t meet all the requirements set by the central bank,” Gumachew told Fortune.

Berhan Bank is the third to change its leadership in recent months. A few weeks ago, Lion Bank appointed Daniel Tekeste to spearhead its attempt at recovery from a disappointing performance last year. Wegagn Bank, another financial institution in troubled waters, chose Aklilu Wubet as its seventh president at the beginning of this year.

Girum is tasked with reversing the lacklustre performance Berhan registered last year.

The Bank netted 195 million Br in profits, a 65pc drop from the previous year when it had recorded noteworthy profits of 551.6 million Br. Shareholders' returns have also been hard hit, down 71pc to 74 Br. The shares have a par value of 1,000 Br.

Like Lion and Wegagen, the shoddy performance is partly attributed to the militarized conflict in the country's north. A dozen of its 261 branches ceased operations due to the war.

However, the main factor is the Bank's mounting provisions reserved to secure sick loans and impaired assets, which soared over 15-fold to 583 million Br. This has deteriorated Berhan's asset quality – its non-performing loans (NPL) ratio climbed to 8.8pc last year, nearly double the five percent threshold recommended by the central bank. The culprit behind the climbing provisions is advance payment guarantees issued to contractors who defaulted on their obligations.

It is becoming increasingly common to find commercial banks in a precarious position due to sub-serviced bonds.

Last June, Berhan, Wegagen and Enat banks were demanded to settle 751.5 million Br after contractors issued guarantee bonds defaulted on their contracts on four building projects in Addis Abeba under the Federal Building Construction Project Office. A month ago, judges at the Federal High Court ordered Berhan to pay 86 million Br to the Ethiopian Roads Administration (ERA) for a bond it issued to Tekleberhan Ambaye Construction Plc (TACON) for a road project in the Oromia Regional State. The verdict came following a year of legal wrangling.