Finance: Italian Bank Secures Special Deal in Eritrea

Unprecedented Exemption for Banco di Roma

ADDIS ABABA - In a surprising move, the Ethiopian government has granted Italian bank Banco di Roma an exemption from adapting to the country’s new banking law, allowing it to maintain full control over its Eritrean subsidiaries.

Background

The decision, which came into effect in 1964, was met with surprise given the bank’s previous history of tensions with the Ethiopian government. However, sources close to the deal reveal that Emperor Haile Selassie was keen to avoid an international controversy and preserve the interests of the Italian business community.

Terms of the Deal

The new arrangement places Banco di Roma in a direct relationship with the Crown, bypassing the formal hierarchy that regulates commercial banks in Ethiopia. The bank’s status is now regulated by an imperial decree rather than Proclamation 206, which introduced a new banking law in 1963.

Informal Payments and Tribute

In return for this special treatment, Banco di Roma is expected to make informal payments to the Crown and its local associates, disguised as commercial loans. These levies are seen as a form of tribute, similar to those paid by other semi-independent enclaves across the country.

Concerns and Reactions

The move has sparked concerns about the fairness of the deal and whether it undermines the country’s banking laws. However, officials close to the matter argue that the arrangement is necessary to maintain good relations with Italy and ensure continued investment in the Eritrean province.

“This decision was not taken lightly,” said a government official who wished to remain anonymous. “We needed to find a solution that would benefit both parties and avoid any controversy. We believe this arrangement will allow for continued growth and development in the region.”

Role of the National Bank of Ethiopia

The deal has also raised questions about the role of the National Bank of Ethiopia, which is expected to oversee the country’s banking sector. The bank’s governor, Menasse Lemma, had previously requested that Banco di Roma adapt to Ethiopian law, but it appears that the government has instead chosen to grant the bank special treatment.

Implications

The implications of this deal are still unclear, but one thing is certain - it marks a significant departure from the usual norms in Ethiopia’s banking sector.