ADDIS ABABA – The entry of foreign banks would help local banks integrate with the global financial system by through enhancing their management capabilities to meet international standards, a banker said.
Amhara Bank CEO, Yohannes Ayalew (PhD) told The Ethiopian Herald that the entry of foreign banks will have a positive impact on the local ones as they bring valuable assets, including advanced management practices, technological expertise, and international banking experience.
He believes that competition will be a valuable learning experience, helping local banks identify and improve their weaknesses.
Yohannes acknowledged the potential threat to local banks is profit margins due to the increased competition but emphasized the need to transform this challenge into an opportunity for rapid advancement and growth.
He added their entry should be seen as necessary for Ethiopia’s integration into the global financial system. Local banks have still limited international outreach for not having enough branches abroad but may open more after as they are going to compete with the upcoming foreign counterparts.
He said the local banks need to enhance their management capabilities to meet international standards, while strong risk management practices are essential for navigating a more competitive landscape.
The CEO further suggested that local banks should invest in research and technology in order to drive better economic activity and to remain competitive in the industry.
Yohannes also recommended the banks to consider mergers and consolidations to become larger, stronger banks with increased capital and market share. He noted that maintaining and improving quality asset is also crucial for financial stability and competitiveness.
Moreover, they need to upgrade capital reserves essential for enduring burdens since expanding their market base will help the local banks maintain their position even with the entry of foreign banks, he indicated.
Yohannes affirmed that Amhara bank is committed to utilize the competition from foreign banks as an opportunity for growth and strengthen its position in the market.
Recognizing possible challenges related to allowing foreign banks, he emphasized their potential for positive evolution and development in Ethiopian banking through strategic adjustment and improvement.
BY MISGANAW ASNAKE
THE ETHIOPIAN HERALD FRIDAY 10 JANUARY 2025
