CBE, Wegagen Bank Launch First-ever Investment Banks

The CBE SC Capital Investment Bank and Wegagen Capital Investment Bank (WCIB) become Ethiopia’s first licensed investment banks.

Majority-owned by Wegagen Bank with a 75pc stake, WCIB plans to offer advisory, brokerage, and underwriting services. The remaining shares are held by various stakeholders, including Africa Insurance Company with five percent stake.

The new investment bank begins with an initial capital of 358 million Br and intends to transition into a share company. Wegagen Bank shareholders approved amendments during a recent general assembly to facilitate the incorporation of this new subsidiary.

Brutawit Dawit has been appointed CEO of WCIB. She previously served as CEO at Wegagen, Abyssinia, and Zemen banks, and has extensive experience as a financial consultant.

The Ethiopian Capital Market Authority (ECMA) has also granted licenses to four additional firms.

CBE SC Capital Investment Bank, largely owned by the state-run Commercial Bank of Ethiopia (CBE), secured its license after a five-month review process. The Bank starts operations with 100 million Br, with plans to increase its capital to 200 million Br once it secures a custodian license.

Dalol Capital holds a 30pc stake in this new entity.

Ethio Fidelity SC was licensed as a securities dealer, while Equations Security Advisor Plc and HST Investment Advisors Plc were both approved as investment advisory firms. According to Tewedaj Gezahegn, who heads HST Investment Advisors, her firm began operations with 1.5 million Br, exceeding ECMA's minimum requirement of half a million Birr.

Mamo Meheretu, governor of the National Bank of Ethiopia (NBE), said the importance of these licenses in strengthening domestic financial markets is crucial. According to the Governor, the newly licensed financial institutions would help reduce Ethiopia's dependence on foreign investments by encouraging local capital formation through public offerings.

He disclosed that the federal government plans to introduce treasury bonds for sale to the public, providing another financing tool to boost domestic financial activity.

Hana Tehelku, director-general of ECMA, described the licensing process as rigorous, requiring thorough evaluations of financial stability, business plans, regulatory compliance, and corporate governance. ECMA will carry out quarterly financial assessments to maintain market integrity, she disclosed.

There are 32 commercial banks, 17 insurance companies, over 30 microfinance institutions, and more than 350,000 retail investors.

“ECMA plans to issue more licenses in the future,” Hana said.