Fortune News | Jan 30,2021
The National Bank of Ethiopia (NBE) has ordered all bank accounts that have been opened in Tigray Regional State frozen. With the new procedure, an individual living in any part of the country cannot withdraw cash from a bank account that was opened in one of the towns of the Regional State.
The freezing order was communicated to the presidents of all of the commercial banks via a text message early last week. No circular or directive was issued for the new order. Two weeks ago, the regulatory bank had commanded all of the banks operating in the Regional State to close doors and fully cease services.
The message from the central bank does not have much explanation, according to bank executives Fortunetalked to.
The new rule from the central bank coincided with the Office of the Attorney General's announcement delisting 34 companies operating under Endowment Fund for the Rehabilitation of Tigray (EFFORT). The Attorney General also put out an order to freeze the assets and bank accounts of these business entities as of November 16, 2020, accusing them of attempting to transfer and hide their assets.
Established in the summer of 1995 with seed money contributed by the Tigray People's Liberation Front (TPLF), EFFORT has subsidiary companies engaged in different business areas. Sur Construction, Trans Ethiopia, Mesfin Industrial Engineering, Sheba Tannery, Mega Printing, Messebo Cement Factory and Meganet Corporation are among the companies whose accounts have been suspended. The Attorney General has also noted that an asset manager will be assigned to oversee the confiscated assets and resources of the companies.
For the past two weeks, all 616 bank branches across the Regional State have closed their doors following orders from the central bank, which claimed that it saw signs of looting of banks in the Regional State. The incident followed the military engagement between the federal government and the regional state administration that began early this month.
On the same date the conflict erupted, the central bank had delivered 1.3 billion Br worth of the new banknotes that were ready to be distributed across the Regional State loaded on two cargo aircraft. The aircraft were also supposed to bring back four billion Birr worth of the old notes.
Head offices of the banks do not have communications with the branches since there is no internet service in the Regional State connecting the branches with the core banking system.
Even though the central bank has ordered the banks to be closed, the regional government has made some banks open branches, as of the end of last week. And the banks had been serving customers with a withdrawal cap of 10,000 Br a person, according to sources close to the case.
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