NBE Scolds Zemen Bank’s President


The president gets warning after alleged approval of 50m Br loan




Regulators at the National Bank of Ethiopia (NBE) have scolded the President of Zemen Bank, Tsegay Tetemke, over alleged approval of loans involving 50 million Br disbursed at various times.

The Bank`s executives consider loans approval for pre-shipment as “clean”, which allows customers to access loans without any collateral put to secure them. However, regulators at the central bank issued a letter of reprimand after they found out that the loans were defaulted and remained in the bank’s non-performing loans (NPL).

The lending book of Zemen has been growing exponentially over the past two years. Last year, a number of loans disbursed by the bank were worth 3.4 billion Br, an increase from 2.2 billion Br in 2015. However, at 4.7pc as of June 2016, Zemen has the third highest NPL in the industry, next to the Development Bank of Ethiopia (DBE) and the Cooperative Bank of Oromia (CBO).

The loan was given to Shag Import Export Enterprise, a local company owned by Shefare Assefa and engaged in the export of cattle.

“Issuing a clean loan to corporate customers is usual in the banking industry,” said Tsegay, serving Zemen as a president since 2011.

“We gave the credit after we reviewed the account, history and export document of the company.”

Before his appointment to Zemen, Tsegay had served as the founding president of Lion International Bank, and he has 27 years of experience at the state-owned Commercial Bank of Ethiopia (CBE) where he served in different posts, including vice president.

A senior executive at Zemen sees the action of the central bank as unfair.

“This is our job,” he told Fortune. “I think they want us to sit and wait for their response for every action we do.”

During the approval of the clean loan, letters of credit opened by Shag indicate that the company was meant to export 6.8 million dollars worth of cattle.

“This is not the only clean loan we have,” said Tsegay. “We keep continuing to give such loans as they are one of our strategies to retain more customers.”

The scolding came almost eight months after two senior executives of the bank were forced by the central bank to leave. Helaway Tadesse, senior vice president, and Sebhat Belayneh, the vice president of international banking, were accused of favouring certain groups of business, which they denied.

Helaway’s suspension was related to loans the Bank advanced to Pioneer Agro Resident, co-owned by former Zemen Board Chairman, Ermias Amelga. The allegations against Sebhat involved favourable treatment of a friend of one of the Bank’s vice presidents. He allegedly decided to sell a building held as collateral for an undervalued price of two million Birr less than the outstanding loan.

“We are sorry to lose our VPs,” Tsegay had told Fortune five months ago. “They were great assets to the company.”

In 2016, Zemen earned a net profit of 203 million Br, which is 32pc higher than the previous year.

After Zemen had lost its VPs, it came up with a new structure with new vice presidential positions, assigning four staffs who have served in the bank for five years as acting VPs.

 



By SAMSON BERHANE
FORTUNE STAFF WRITER

Published on May 06,2017 [ Vol 17 ,No 888]


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