The Complex History of Banco di Roma’s Operations in Eritrea (1952-1966)

Establishment and Early Years (1952-1956)

Banco di Roma, an Italian bank, established a branch in Asmara, Eritrea in 1952. At the time, Eritrea was under Italian administration. This move allowed the Eritrean ruling class to access hard currency and mortgage loans that were not available through the State Bank of Ethiopia.

Changes in Credit Policy (1956)

Under pressure from Eritrean interest groups, Banco di Roma began issuing mortgage loans to prominent members of the Eritrean administration and their relatives. This move marked a significant shift in the bank’s credit policy.

Informal Payments and Special Privileges

The bank made informal payments disguised as commercial loans to the Crown and its local associates in exchange for special privileges. These arrangements reinforced Banco di Roma’s connection to the Crown and the semi-autonomous enclaves that existed in other regions of Ethiopia.

Proclamation 206 (1963)

A new banking law was introduced, which split the State Bank of Ethiopia between the National Bank and the Commercial Bank. Foreign banks were only allowed to operate on condition that they established joint ventures with a majority Ethiopian shareholding.

The Impact of Proclamation 206

The proclamation aimed to put an end to the Eritrean exception and recognize the sovereign prerogatives of the National Bank of Ethiopia. However, Banco di Roma was exempted from adapting to the new banking law by Emperor Haile Selassie in 1964, with the condition that it would not operate beyond the borders of the Eritrean province.

Conclusion

The complex history of Banco di Roma’s operations in Eritrea highlights the intricate relationships between the bank, the Ethiopian government, and the local ruling class. The bank’s semi-independent status was maintained through informal payments and special privileges, which reinforced its connection to the Crown and the semi-autonomous enclaves that existed in other regions of Ethiopia.