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An assurance from the Bank’s home supervisory authority is also expected to confirm the applicant is in good financial standing, maintains the home supervisor’s risk management standards, meets prudential requirements and has been rated investment grade, “that is, at least BBB- or BAA or equivalent, by rating agencies such as Standard & Poor’s, Fitch or Moody’s.”
Foreign banks seeking to operate through subsidiaries in Ethiopia will be admitted only if they hold an investment grade credit rating of at least BBB- or its equivalent, according to a directive in the making at the National Bank of Ethiopia (NBE).
The draft ‘Requirements for Licensing and Renewal of Banking Business and Representative Office Directive’ seeks to set entry standards for foreign entrants and marks the first time that Ethiopia has made an external credit-rating threshold a statutory prerequisite for market access.
The draft requires any foreign bank wishing to establish a subsidiary, branch or representative office to submit a formal “no-objection letter” from its home supervisory authority directly to the NBE.
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An assurance from the Bank’s home supervisory authority is also expected to confirm the applicant is in good financial standing, maintains the home supervisor’s risk management standards, meets prudential requirements and has been rated investment grade, “that is, at least BBB- or BAA or equivalent, by rating agencies such as Standard & Poor’s, Fitch or Moody’s.”
