Capital Raise Splits Anbesa Bank’s Board, Shareholders

Anbesa Bank is currently embroiled in a significant corporate governance crisis, stemming from a disputed board election and allegations of impropriety during a recent capital raise. The National Bank of Ethiopia (NBE) intervened by rejecting the bank's board election results, while affirming its capital increase, which saw the bank exceed the new minimum capital requirement of ETB 5 billion. This intervention has prompted a strong reaction from a substantial portion of shareholders, who have petitioned the NBE Governor for clarification. The dispute highlights critical issues in Ethiopia's evolving banking regulatory landscape, particularly concerning corporate governance, shareholder rights, and the NBE's enhanced supervisory role in ensuring financial stability and compliance with prudential lending practices amidst increasing capital demands and market liberalization.

Ethiopia's banking sector, undergoing a period of significant reform and liberalization, is currently witnessing a high-profile corporate governance dispute at Anbesa Bank. The National Bank of Ethiopia (NBE) recently rejected the results of the bank's board election held in October 2025, while simultaneously upholding the resolution to increase its capital, which successfully pushed Anbesa Bank past the new ETB 5 billion minimum capital threshold. This unprecedented intervention by the central bank has ignited a fierce debate among shareholders and board members, exposing underlying tensions related to corporate control, lending practices, and regulatory oversight.

The core of the conflict appears to involve allegations of questionable lending decisions and potential conflicts of interest, particularly concerning non-performing loans linked to the Tigray region and associated entities. The NBE's decision to mandate a fresh board election, citing "systemic internal mistrust," underscores the regulator's commitment to strengthening corporate governance within the financial sector. This article will delve into the legal and regulatory frameworks governing capital raises and corporate governance in Ethiopian banks, analyzing the implications of such disputes for practitioners and the broader financial market.

The Ethiopian banking sector operates under a robust, albeit evolving, regulatory framework primarily governed by the Banking Business Proclamation No. 1360/2024 (which repealed Proclamation No. 592/2008) and directives issued by the National Bank of Ethiopia (NBE). A key driver of recent regulatory changes has been the NBE's push to enhance the financial resilience of banks. In April 2021, NBE Directive SBB/78/2021 mandated that all existing commercial banks increase their minimum paid-up capital to ETB 5 billion by June 30, 2026, a significant jump from previous requirements. This directive aimed to foster stronger, more capable banks capable of meeting the financing needs of a growing economy.

Further strengthening prudential regulation, NBE Directive No. SBB/95/2025, effective November 7, 2025, introduced a fully risk-based capital adequacy framework, aligning Ethiopia with Basel II and Basel III standards. This directive requires banks to maintain specific capital ratios (e.g., Common Equity Tier 1 ratio of 7%, Tier 1 capital of 9%, and total capital of 11% of risk-weighted assets) with full compliance expected by December 31, 2026. Concurrently, the Commercial Code of Ethiopia (Proclamation No. 1243/2021) brought about a comprehensive overhaul of corporate law, introducing enhanced provisions for corporate governance, shareholder rights, and mechanisms for resolving shareholder disputes, including derivative actions and minority shareholder protections. The NBE has also issued specific corporate governance directives for banks, such as SBB/91/2024, which detail requirements for board composition, committees, and the management of conflicts of interest.

The Anbesa Bank situation exemplifies the complexities arising from the intersection of stringent capital requirements, evolving corporate governance standards, and the NBE's assertive supervisory role. While the bank successfully met the ETB 5 billion minimum capital requirement, the NBE's rejection of the board election highlights a deeper concern regarding the integrity of the bank's internal governance. The NBE's decision to strip Anbesa Bank of its autonomy in conducting future board elections, citing "systemic internal mistrust," underscores the regulator's broad powers under the Banking Business Proclamation to ensure sound and stable financial institutions.

The dispute's alleged links to political interests and disagreements over lending to heavily indebted companies in the Tigray region raise serious questions about adherence to prudent banking practices and NBE regulations. The Commercial Code of Ethiopia (Proclamation No. 1243/2021) imposes express duties of loyalty, care, and diligence on directors, making them jointly and severally liable for damages caused by breaches of these duties. Furthermore, NBE directives, such as SBB/88/2024 on related-party transactions and SBB/90/2024 on asset classification and provisioning, aim to prevent conflicts of interest and ensure robust risk management. The allegations of some shareholders illegally using bank loans to acquire the bank's own shares, if proven, would constitute a severe breach of fiduciary duty and potentially violate prohibitions against self-dealing.

Shareholders representing approximately 35% of Anbesa Bank's capital have petitioned the NBE Governor, seeking clarification on the regulator's decision. Under the 2021 Commercial Code, shareholders possess significant rights, including the right to access company documents, request audits, and institute legal proceedings against board members for misconduct or mismanagement. The Code also provides for minority shareholder protection and mechanisms for resolving disputes, including judicial review of unlawful resolutions. The NBE's upholding of the capital increase, despite the governance issues, suggests a balancing act: ensuring financial stability through adequate capitalization while simultaneously demanding adherence to robust corporate governance standards.

This case also brings into focus the enhanced accountability of boards of directors under NBE Directive SBB/95/2025, which requires boards to ensure capital ratios remain above regulatory minimums and to submit capital management strategies for NBE review. The NBE's direct involvement in the board election process, a measure typically reserved for extreme circumstances, signals a low tolerance for governance failures that could jeopardize a bank's stability or public confidence. The ongoing liberalization of Ethiopia's financial sector, including the entry of foreign banks under Proclamation No. 1360/2024, further necessitates strong domestic corporate governance to attract and protect investment.

The Anbesa Bank capital raise and subsequent board dispute serve as a critical reminder for legal practitioners and financial institutions in Ethiopia of the paramount importance of robust corporate governance and strict adherence to regulatory frameworks. The National Bank of Ethiopia's decisive intervention signals a new era of heightened scrutiny and a proactive approach to maintaining financial sector stability. Banks must not only meet capital adequacy requirements but also demonstrate unwavering commitment to transparent and ethical governance practices, particularly in light of the new Commercial Code and NBE directives.

Practitioners advising financial institutions should emphasize the need for comprehensive internal controls, clear policies on related-party transactions, and proactive dispute resolution mechanisms. Boards of directors must be acutely aware of their fiduciary duties and potential liabilities, ensuring that all decisions, especially those pertaining to capital raises and lending, are beyond reproach and in the best interest of the institution and its shareholders. As Ethiopia's financial sector continues to liberalize and integrate with global standards, the Anbesa Bank case will likely set a precedent for how the NBE addresses governance failures, underscoring the imperative for all stakeholders to prioritize compliance and sound corporate practices to foster a resilient and trustworthy banking environment.