Thursday, June 13, 2024

Selam Bank ‘Is not to be!’


Frustration, uncertainty engulfs investors

The much anticipated unveiling of the under formation mortgage bank, Selam bank, falls through the cracks.
The founders agreed with Goh-Betoch Bank to transfer its shareholders.
Selam bank which was well on its way to becoming the second mortgage bank following Goh Betoch bank was backed by most influential leaders from various industries, including media, business, and real estate elite including Bethlehem Thilahun, Aman Feshetsion, the founder of EBS TV, Zemedeneh Negatu, head of Fairfax Africa Fund Ethiopia and Yared Alemayehu of Walia Tannery.
After facing delays from its initial plan to start share selling in late 2019, the bank faced further delays resulting from the pandemic, and started officially selling its share in May 2021. It then promised to launch its operation 5 months from May 2021 aiming to meet the huge housing demand in Addis Ababa and other towns through introducing new construction technologies and innovations at affordable prices, to finance 100,000 affordable mortgages totaling ETB 200 billion in the next 5 years
Now, the bank is planning to transfer its shareholders to Goh-Betoch Bank.
Bethlehem Tilahun, one of the founders of the bank informed Capital that they have gained permission from the regulator, National Bank of Ethiopia, to go ahead with the process. However, she declined from giving further information on the matter.
It is said that Selam Bank’s shares had a par value of 1,000 Br, with a minimum purchase of 10 shares required to join, while the maximum amount an individual could buy amounted to 100,000 shares. The bank was also planning to raise a paid-up capital of five billion birr of which two billion was before the opening its doors to customers.
Now, Goh-Betoch has taken over Selam’s shareholders, which has been welcomed as a positive step towards salvaging some of the investments made by individuals and businesses.
Mulugeta Asmare, president of Goh told capital that after the request of Selam Bank, Goh bank’s board approved the request.
“Since we are currently selling shares, it is okay for Goh, if they join individually or as a corporate,” the president said whilst indicating that the number and amount of shareholders and shares are yet to be seen.
Sources who spoke to Capital now accuse the bank for going silent on shareholders on updates of the bank, “The bank had a promising start, with its share sale generating significant interest and enthusiasm from the public. The bank had set an ambitious goal of collecting two billion Ethiopian birr in capital, and it appeared well on track to achieving it. The bank’s active and rapid promotion had also raised hopes that it would be a serious contender in Ethiopia’s mortgage banking industry. The situation has left many wondering about the future and what it could mean for Ethiopia’s mortgage banking industry.”
Though there could be several potential reasons for Selam Bank’s sudden silence, as sources indicate, one possible reason could be that the bank is facing internal issues, such as management or operational challenges that have hindered its ability to operate including economic factors, which can hamper the bank’s operations.
“Regardless of the reason for the bank’s silence, it is crucial for Selam Bank to provide its stakeholders with regular updates and maintain transparent communication channels. The lack of communication has caused frustration and uncertainty, which could negatively impact the bank’s reputation and investor confidence,” lamented sources.
Goh is the first and the only private mortgage bank since 70s which started its operation in October 2021 with a capital of 1.2 billion birr.
By way of simple definition, a mortgage bank is a bank specializing in mortgage loans. It can be involved in originating or servicing mortgage loans, or both. The banks’ loan their own capital to borrowers and either collect payments in installments along with a certain rate of interest or sell their loans in the secondary market.

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