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Bereket Replaces Abay as CBEís Board Chairman

Some find Abayís departure unexpected, while others are surprised by Bereketsís appointment

 

Bereket Simon, director general of the government Communications Affairs Office, under a ministerial portfolio, has replaced Abay Tsehaye as chairman of the board of directors of the state owned Commercial Bank of Ethiopia (CBE), sources disclosed to Fortune.

Abay, who is now director of Sugar Corporation under a ministerial portfolio, has been leading CBE since his first appointment, in January 2007, replacing Mekonnen Manyazewal, now minister of Industry (MoI).

Bereketís appointment to the helm of CBE, the largest financial organisation in the country with 302 branches and mobilising no less than 80pc of the nationís finances, was signed on Friday, February 4, 2011, by Sintayehu Woldemikael (PhD), director of the regulatory agency for state owned financial institutions.

The departure of Abay from CBE was unexpected, according to reliable sources.

He chaired a half-year meeting attended by 150 branch managers from across the country in Adama (Nazareth), last week.

The meeting was concluded in a celebratory spirit, for attendees all agreed that the reforms introduced through the Business Process Reengineering (BPR) are bearing fruit; Abay is credited with launching the reforms at the bank, a senior manager at the CBE told Fortune.

  Assefa Abraha: Now studying at Harvard, assumed chairmanship at CBE during the turbulent transition from a command economy of the Mengistu era to the quasi-liberal economic environment after the Derg.

 

     
 

Philipos W. Mariam: Now believed to be in retirement after assuming a similar role at Bank of Abyssinia (BoA), Philipos took over from Assefa following the political crises within the leadership of the EPRDF that led to the arrest of Assefa. Philiposí reign at CBE was less dramatic and uneventful, despite the bankís NPLs rate hitting a staggering high of 54pc. He appointed Gezahegn Yilma, one of the vice presidents, when Tilahun Abay, the longest serving president of CBE was arrested.

 

     


 

 

Mekonnen Manyazewal: Now the minister of Industry (MoI), his period at CBE is considered positively for his ability not only in performance evaluations but also contributions in planning submitted by the management. CBEís total assets had gone up from 31 billion Br to nearly 36 billion Br during his chairmanship. Mekonnen brought on Abie Sano, the youngest manager to claim the top position in the 65-year history of CBE. Abe is now CEO of Oromia International Bank (OIB).

 

     


 

 

Abay Tsehaye: A politician with a background in the field during the armed struggle against the military regime, but no background in finance, many had expected his appointment to be a drawback for CBE. They were proven wrong, for he learned fast and stirred CBE through monumental changes and reforms.

 

     
 
 

Bereket Simon: Similar to Abay in his background, he was a rebel leader and has no prior experience in banking. He will be up for a task about where to take CBE over the coming few years.

 

     
 

Although CBE had planned to mobilise 12 billion Br during the previous operation year, it exceeded target by 700 million Br, leading managers to an ambitious target of mobilising 24 billion Br this fiscal year, senior managers at the bank told Fortune.

Over 102 new branches were opened across the country with a target of mobilising a total of three billion Br. To date, these new branches have collected a little over one billion Birr, helping CBEís half year mobilisation reach 15 billion Br from three million depositors, managers declared at the Adama meeting.

In recovering loans, the managementís plan of collecting 11 billion Br from loans and advances has passed seven billion Birr over the past six months, while mobilisation in foreign currency reached 2.1 billion dollars, surpassing by half the target of 3.7 billion dollars for the year. This was achieved despite income from letters of credit (LCs) decreasing by 25 million dollars from the projected amount of 95 million dollars.

Senior managers at CBE take pride in claiming that there was no other period in recent memory when the bank had a nonperforming loans (NPLs) ratio of 1.2pc (302 million Br).


Some directors of the board give the credit to Abay, for learning fast the nitty-gritty of banking and rebuilding confidence among CBEís rank and file. He has his fair share of critics too, who blame him for letting the bank lose its direction of purpose from a commercial to a development bank.


None of those who attended the Adama meeting ware under the impression that Abay was to leave soon. Neither does the letter from Sintayehu shed any light on the reasons for his replacement.


ďIím more surprised by Bereketís appointment than Abayís departure,Ē a senior figure at the CBE told Fortune.

One of the founding members of the Amhara National Democratic Movement (ANDM) and a member of the all too powerful executive committee of the EPRDF, Bereket does not have a background in chairing a board of a financial firm. He has served as board chairman of the Ethiopian Radio and Television Enterprise (ERTE) and chairs the board of Dashen Brewery, a company under the umbrella of the endowment company, ENDEAVOUR.

Bereket is assuming the leadership role at CBE at what those in the industry see as a critical juncture in the companyís life as it is in the middle of a transition.

By TAMRAT G. GIORGIS
FORTUNE STAFF WRITER

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