A two-year journey behind them, Mulugeta Asmare (left) and Getahun Nana (centre), president and board chairperson, respectively, of the new Goh Mortgage Bank S.C., shared the spotlight with Yinager Dessie (PhD), governor of the National Bank of Ethiopia (NBE), as they marked the issuance of an operating permit. Green lighting Goh to open its doors in the next few months, nearly a year since it had its founding general assembly, the Bank’s promoters celebrated the occasion at the Skylight Hotel last Tuesday, August 10, 2021.
Goh had been heating up preparations to open its services to customers, especially after its delays during COVID-19. It has raised a subscribed capital of 1.2 billion Br, with close to half of that paid up, and appointed a veteran banker, Mulugeta, as its founding president, former president of the Bank of Abyssinia. When it finally opens its doors, it will be the first private bank dedicated to mortgage services.
Goh is only one of many banks to have reached this stage in the industry, which has seen growth in deposit mobilisation, loans and proliferation of specialised financial products. In response, the central bank increased the minimum paid-up capital by 10-fold and imposed on banks offering public shares to be incorporated with at least half a billion Birr in paid-up capital within half a year. Yinager brought up the issue during the event at Skylight Hotel, warning that there will be no extension to the deadline. Others have struggled while banks under formation, such as the Amhara Bank, have sailed through easily, raising over six billion Birr in subscribed capital. Recently, Ramis and Zad, which specialise in interest-free banking, decided to merge to meet the deadline set by the central bank.
Neither will Goh be the only private bank looking to specialise in mortgages. It will have its competitor in Selam Morgage Bank. Housing development is a largely untapped market, but it remains as such for a reason. Constantly changing property values, poor documentation, the absence of professional realtors, and a chaotic brokerage culture hamper mortgage banking from taking off. Experts warn that it would be unsustainable to support mortgage credit using short-term loans from depositors given such a housing market. Promoters of Goh now have the license to try and prove this wrong.
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