Central Bank Cautions Banks over Accounts in Tigray

Several bank accounts opened in Tigray Regional State were frozen a day after the federal government declared a humanitarian unilateral ceasefire, and authorities in Addis Abeba said they withdrew federal forces from the region on June 28, 2021. However, authorities at the central bank left the decision to the banks' discretion, cautioning them to manage risks while the regional state is cut off from the rest of the country.

This was followed by the takeover of Meqelle, the seat of the regional administration, by Tigray Defense Forces (TDF), cheerfully welcomed by thousands of residents. Subsequently, electricity to the region was cut off, telecommunications services interrupted, and air and surface transport from and to the regional state blockaded.

Last week, clients with accounts in the regional state were unable to deposit or withdraw cash – an experience many are suffering for the second time since November last year.

A medical professional who opened an account with the Commercial Bank of Ethiopia (CBE) in Hawzen, a town located in eastern Tigray, discovered on Tuesday morning his account was frozen. He pleaded before the employees of a CBE branch in the Bole neighbourhood but he was told accounts opened in Tigray have been frozen.

Authorities at the National Bank of Ethiopia (NBE) have cautioned banks to manage risk associated with loss of communication and given the choice to freeze accounts if needed, confirmed Solomon Desta, vice governor for financial institutions supervision at the central bank.

Account-holders confirmed that CBE, Lion and Hibret banks have frozen accounts opened in Tigray. There were over 600 bank branches active in Tigray up until last week.

"We don't have central access to branches in the region," Melaku Kebede, CEO of United Bank, told Fortune.

All accounts opened in any of the 23 branches United Bank operates in Tigray remain deactivated beginning June 29.