Jan 25 , 2025
By AKSAH ITALO ( FORTUNE STAFF WRITER )


Geez Bank, a nascent commercial bank, currently under formation, is embroiled in a tense dispute that has overshadowed its promoters' plans to begin operations. Organisers are divided over whether to proceed and meet strict capital requirements, invest in other banks, or shift to services such as microfinance and insurance.

The result is a tangled process in which the Bank’s future remains in limbo, with two groups claiming control. Differences have surfaced over negotiations with an existing bank, Lion International Bank, over a possible share transfer.

Geez Bank’s troubles can be traced back to November 2020, when the civil war in the north erupted as organisers were racing to meet a deadline set by the National Bank of Ethiopia (NBE). In April 2021, the NBE raised the minimum capital requirements for commercial banks from two billion Birr to five billion Birr, with existing banks given time until June 2026. For emerging banks, the deadline was set two years later. Geez Bank needed to collect half a billion Birr in paid-up capital within six months to begin operations.



However, the war upended much of the process and caused disruptions, leading the Bank to miss key windows. The initial plan was to close share sales by July 2021, with 345 million Br in shares. The war, however, derailed that goal and left the Bank struggling to stay on track.

Despite this setback, and once the conflict subsided, organisers resumed selling shares about two years later. They have since raised 610 million Br equity, with a subscribed capital of two billion Birr from around 12,200 shareholders.

Compounding the challenge is a deep rift among those responsible for Geez Bank’s formation. Led initially by a team of individuals that included Abraha Gebrewahed, the founding committee's chairman, Gebremedhin Hailu, and Abraha Hailemariam, the committee ran into internal disagreements over strategy and direction. Other members included Azenaw Berhe, Tesfay Hadera, Meresa Tsehaye, Mihret Mehari, Thomas Hailu, Gebrewahed Weldegiwergis, Mulugeta Hagos, Habte Hadush, and Fatume Siraj.

In July last year, a new committee was formed to resolve the disputes and find ways to quickly boost paid-up capital. It comprises Etsegenet Berhe, Angesom Haile, Isaias Tadesse, Gebregziabher Gebremariam, Mulualem Gebrehiwet, Gebremedhin Gebremariam, Tsigabu Belay, Tesfay Gebregergis, and Seid Mohammedbirhan.

Yet, individuals close to the process attributed the stalled transition to "certain members in the old committee" refusing to hand over responsibilities. The alleged refusal has prevented a smooth change in leadership and heightened tensions over the Bank's future direction.


“The bank is in a mess,” said a member.

Organisers have debated three options, deadlines looming and capital requirements being more pressing than ever. To continue raising capital to reach the five-billion-Birr threshold by 2026, which requires an aggressive push for funds in a market with intense competition. Consider investing equity mobilised in other banks. Transform Geez Bank’s effort into a microfinance institution, investment bank, or insurance company.



In November 2024, a mediation committee comprising civil society groups, religious leaders, and public figures tried intervening, hoping to calm nerves and chart a path forward. Among those who joined the mediation were Tigray Public Diplomacy, Gerealta Forum, Fiseha Asgedom (Amb.), and religious leaders such as Selama Woldesamuel (Abune). The group recommended reforming the organising committee, bringing in new investors and influential figures considered capable of steering Geez Bank out of its current troubles. A provisional assembly approved the plan on December 24, 2024.

Despite nine founding committee members agreeing to the proposed transition, three key figures — Abraha Gebrewahed, Gebremedhin Hailu, and Azenaw Berha — did not go along with the plan. However, they began discussions with Lion Bank about the potential to buy its shares at par value, effectively putting the transition on hold and deepening the institutional split. According to a member of the mediation group, the three, along with Lion Bank executives, have been meeting with shareholders in Adigrat, Meqele, and Addis Abeba for about a month, hoping to seal a share transfer deal.

The first committee sent a report to the NBE on January 10, 2025, signed by Abraha Gebrewahed. The report revealed that some shareholders are considering share transfers to other banks or forming an investment firm. Others consider converting the initiative into microfinance, insurance, or investment banking. According to the document, there is limited time available and an urgent need to find better options for shareholders after their equity has been idle for five years.

“We've to unlock shareholders’ accounts,” said Gebrelibanos Gebremariam, executive manager, from his office in Addis Abeba.


He disclosed that Geez Bank is running short on time and that its shareholders should explore all options. Multiple meetings have been held to let investors decide how to proceed, while members of the previous organising committee, such as Thomas, believe in trying to rally enough supporters to keep Geez Bank alive.

“The bank’s future is at stake,” said Thomas Hailu, a member of the existing committee. "The opportunity to raise more equity has not disappeared. It should be quickly seized."


According to observers, Lion Bank stands to gain from any takeover or acquisition of Geez Bank’s shareholders. With deposits of 35 billion Br, total assets of 43 billion Br, and 30.4 billion Br in loans and advances, the Bank is already a sizable player in the banking industry. Worku Lemma, a financial consultant, sees such a deal would allow Lion Bank to expand its capital, customer base, and liquidity instantly.

“It provides an opportunity to increase its overall capacity,” he said.

However, he cautioned shareholders to consider the costs of buying shares in an existing bank.

Another industry veteran, Eshetu Fantaye, echoed his caution and urged organisers to avoid making decisions based on emotions or immediate resolution. He believes the Lion Bank proposal could improve liquidity without a high-interest burden. However, he also recommends that treasury bills (T-bills) offer a risk-free return of 15pc and that other banks might have higher earnings potential than Lion Bank could eventually deliver.

“Shareholders should consider better returns,” he said, adding that a close look at Lion Bank’s finances, including general reserves and paid-up capital, is essential.

Lion Bank, which has 3.1 billion Br in capital and close to meeting the Central Bank’s minimum requirement, has reportedly offered to allow Geez Bank shareholders to buy its shares at par value and potentially access non-collateralised loans. Lion Bank directors reportedly indicated they might be willing to hire 23 Geez Bank employees on board, a move that one organising committee member described as an “attractive investment opportunity.”

“We're still discussing with shareholders,” said Mulugeta Teklu, Lion Bank's director of secretary. “It’s too early to provide detailed information.”

Nothing is set in stone until late last week, as negotiations continue, and opinions vary widely among Geez Bank shareholders.


“There is a divide among shareholders, delaying final decisions,” said Thomas.

Most newly elected organising committee members prefer establishing Geez Bank as a commercial bank. They believe that strong leadership and more capital can steer the initiative to success, even though the losses caused by the war have doubted the Bank’s viability.

However, Eshetu wondered if Geez Bank could compete with well-established domestic lenders and the potential arrival of foreign banks. He predicted that small and recently formed banks would struggle to survive without adequate capital or strong management.

“Commercial banks lacking enough resources will face serious challenges,” he warns.

Geez Bank's shareholders say they are under pressure. Roughly 10pc of Geez Bank’s shareholders are from the Tigray Regional State, which was severely affected by the two-year conflict. Many shareholders say their money has been tied up for too long. Some blame the founding committee as "weak" for the dispute, alleging that Geez's leadership should have adapted more quickly to wartime conditions and changing regulations.

“I’ve lost faith in the initiate,” said Tesmegen Demoz, who joined in 2021 with high hopes. “A stronger team would have served the Bank better.”

He believes the crisis comes from inadequate leadership, arguing that a more capable team could have handled the war’s challenges and prevented the current deadlock.

Central Bank officials have shown no sign of relaxing the capital requirements or bending the rules to accommodate newcomers struggling to raise sufficient equity.

“All banks should comply with the rules,” said Vice Governor Fikadu Digafe. “There'll be no exceptions.



PUBLISHED ON Jan 25,2025 [ VOL 25 , NO 1291]


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