Lion International Bank S.C commanded bids of up to 40pc over its par value of 25Br. The share auction, which was held on April 3, 2017, attracted bids for 670,396 available shares.
Lion International Bank reported a hefty 347.7 million Br profit for the last fiscal year. This is a 27pc increase from the previous year for the decade-old bank.
It began operations with only 100 million Br but now it’s paid up capital has reached over 642 million Br, in accordance with new banking regulations that required banks to have a minimum capital of 500 million Br.
Banking industry experts are now seeing a trend in the right direction from bidders in the share auctions.
“A bid of 40pc of the Bank’s par value is reasonable bid for Lion Bank,” says a financial expert with close to thirty years of experience in the banking industry.
“In the last four or five years, the Bank has been showing steady growth and improvement,” says Lion’s president,Getachew Solomon.
The start of the auctioning saw banks receiving bids as high as 26 times their par value. Awash International Bank (AIB), the first bank to hold a share auction, saw a highest bid of 20,000 Br per share during its sale. Bank of Abyssinia received a highest bid of 660 Br per share.
However, in recent auctions, the trend seemed to come back down to earth, with Wegagen Bank receiving a highest bid of 1,427 Br.
Financial experts are happy about the trend that seems to be emerging.
“Shareholders are demonstrating good financial sensibility,” says the financial expert. “The bids that are starting to come up are more in line with what will get good returns.”
The National Bank issued a directive in November 2016, directing banks to return any shares by foreign nationals of Ethiopian origin. The shares were then put up for auction in an open bid process, allowing members of the public to bid for them. The former shareholders were directed to collect the values of their shares and their accrued dividends as of June 30 2016.
Slightly controversial at the time that is was presented, the directive came in time for the banks’ annual general meetings with their shareholders, where some expressed frustration about the restrictions that had been imposed on shareholders of financial institutions.
No foreign national, or company with foreign members can own shares in the Ethiopian financial industry, according to the directive.
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