The National Bank of Ethiopia (NBE) has drafted a new directive that would tighten control over the transfer of ownership in commercial banks, granting it the authority to block, approve, or reverse share transactions involving significant shareholders.The draft directive, titled Transfer of Significant Ownership in a Bank, is currently open for public consultation.

The central bank said the measure aims to curb irregular ownership transfers and ensure that investors in the banking sector meet integrity and financial transparency requirements. The proposal applies to any transaction involving at least two per cent of a bank’s total shares, requiring prior approval before completion.

Under the draft, NBE would have the power to demand proof of fund sources and reject or nullify transactions deemed to breach prudential standards or involve illicit financing. Banks would also be required to report any changes in major ownership within five working days.

The proposed oversight mechanism is part of the central bank’s ongoing reform to enhance governance and align the sector with international supervisory standards. It follows recent moves to strengthen capital requirements, improve board accountability, and reduce related-party risks.

The directive remains under stakeholder consultation, with feedback expected before final endorsement.