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SBB/99/2026 -REQUIREMENTS FOR LICENSING A BANK BRANCH TO OPERATE IN SPECIAL ECONOMIC ZONE
National Bank of EthiopiaSBB/99/2026
Summary
This directive outlines the requirements for licensing a bank branch to operate in a Special Economic Zone (SEZ) in Ethiopia, covering application criteria, operational requirements, and restrictions. It aims to ensure proper financial service delivery within SEZs to support their development.
Who's affected
Banks, including private, state-owned, foreign subsidiaries, and foreign branches, seeking to establish operations within Ethiopia's Special Economic Zones.
Action required
Banks intending to operate in a Special Economic Zone must ensure their branches are licensed by the National Bank and meet specific criteria related to market share, capital adequacy, liquidity, non-performing loans, and foreign exchange services. They must also adhere to all applicable regulatory requirements.
Key points
5- Directive No. SBB/99/2026 governs bank branch licensing in Special Economic Zones.
- Specific prudential requirements (market share, capital adequacy, liquidity, NPLs) must be met.
- Foreign exchange services are mandatory for SEZ branches.
- Services are restricted to residents within the SEZ.
- Existing banks in SEZ areas have a two-year compliance period.
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Requirements
9- A bank must obtain a license from the National Bank to operate a branch in a Special Economic Zone.
- Mandatory provision of foreign exchange services in the SEZ branch.
- Availability of all banking services to individuals and business entities within the zone.
- Presentation of a signed provisional rent/lease agreement during application.
- Compliance with all requirements of the National Bank Branch Opening Directive No. SBB/66/2018 or its amendments.
- Meeting minimum criteria: at least 1% market share (total assets), capital adequacy ratio 2 percentage points higher than minimum, meeting minimum liquidity ratio for three consecutive months, non-performing loans ratio not exceeding maximum regulatory requirement for four consecutive quarters, and a commendable track record in settling foreign exchange obligations.
- Newly licensed foreign bank subsidiaries or branches are exempted from the 1% market share requirement for the first two years.
- Ongoing fulfillment of all requirements outlined in sub-article 4.6.
- Compliance with all regulatory requirements unless otherwise stated in relevant laws, regulations, and National Bank Directives.
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Rights and permissions
2- Banks are entitled to operate banking business in Special Economic Zones upon meeting the licensing and operational requirements.
- Newly licensed foreign bank subsidiaries or branches have an exemption from the market share requirement for the first two years.
Restrictions
2- Bank branches licensed to operate in a Special Economic Zone shall deliver banking services ONLY to residents of the zone.
- The National Bank may restrict the number of bank branches operating in a specific Special Economic Zone.
Penalties
2- The National Bank may take or require rectification measures on a bank that fails to meet ongoing requirements.
- A bank failing to comply within two years may be instructed by the National Bank to relocate and close its branch.
Objectives
3- To establish criteria, standards, and requirements for bank branches operating in Special Economic Zones.
- To ensure the delivery of financial services crucial for the development and success of Special Economic Zones.
- To facilitate the experimentation of conducive investment and business environment reforms within SEZs.
Organizations
2- National Bank of Ethiopia
- Commercial Code
Legal references
4- Special Economic Zone Proclamation No. 1322/2024
- Banking Business Proclamation No. 1360/2025
- National Bank Directive No. SBB/66/2018
- National Bank Directive No. SBB/85/2022
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Original sourcehttps://nbe.gov.et/files/sbb-99-2026-requirements-for-licensing-a-bank-branch-to-operate-in-special-economic-zone/
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