Addis Credit & Saving Institution (ACSI) has faced a hiccup in its plans to re-establish itself as a commercial bank after regulators at the national bank instructed them to change the proposed moniker 'Bank of Addis' to avoid confusion with a bank already in business.

The National Bank of Ethiopia (NBE) contends the name proposed by the microfinance institution (MFI) is similar to that of Addis International Bank, one of the third-generation banks incorporated in 2011. The executives of Addis Credit are preparing to table suggestions for a new name to their board of directors and shareholders.

“The instruction is to avoid confusion among banks and their customers,” said Frezer Ayalew, director of banking supervision at the NBE.

The central bank has also ordered executives of ACSI to comply with a directive issued two years ago, restricting regional states not to hold more than 70pc of shares in microfinance institutions aspiring to evolve into commercial banks.

Incorporated in 1996, Addis Credit & Saving is owned by the Addis Abeba City Administration and 10 other shareholders. It is one of the 41 microfinance firms operating in the country with 52.4 billion Br in aggregate deposits last year, recording a 17.2pc increase from the previous year. Eleven of these are public-owned, including Addis Credit. The Institute plans to shed off its significant shareholders by increasing equity holders to 25, according to Damtew Alemayehu, managing director of ACSI.

“We'll adjust after the board of directors passes the decision,” he told Fortune. “We're hoping the permit from the National Bank will be granted in the next three months.”

The Institute had initially applied for permission to operate as a commercial bank last September, a month before the deadline for banks to raise half a billion Birr in paid-up capital. Last April, the NBE raised the minimum threshold capital to five billion Birr, granting banks under formation a six-month window to comply with the requirement.

ZamZam and Hijra, both interest-free banks, and Goh Betoch Bank, a mortgage bank, along with Gadaa and Ramis banks, managed to meet the cutoff before the deadline. Over a dozen others under formation failed, now expected to raise the full five billion Birr to enter the lucrative industry. When ACSI handed in its application, its paid-up capital reached 2.4 billion Br, which has doubled since. It is an achievement that puts it along with the largest microfinance institutions in the country, such as the Amhara, Oromia and Omo microfinance firms.

The Oromia Credit & Saving Institution, now Siinqee Bank, has mobilised seven billion Birr in paid-up capital, putting it on an even footing with first-generation private banks like Awash Bank. Oromia Credit serves 700,000 customers. Amhara Credit & Saving Institution also plans to enter the commercial banking industry with over 3.8 billion Br in equity under Tseday Bank.

Unlike newly-formed banks, microfinance institutions with more than half a billion Birr in paid-up capital are assigned two years to comply with requirements set by the national bank, including the new capital threshold.

The executives of Addis Credit say raising five billion Birr in equity should not be as monumental a task as it may seem.

“All we have to do is to recapitalise our profits,” said Damtew.