Amhara Bank is currently feuding with 10 commercial banks over unpaid interests from investment accounts that were opened by the commercial banks after Amhara Bank became a publicly traded institution.
The accounts that are in dispute are investment accounts that were provisioned by the bank for investment purposes. These accounts generated more than 6 billion ETB in paid-up capital but are now closed accounts.
Executives from the other banks argue that they are not obliged to pay interest on closed accounts which is the focal point of the dispute. According to Amhara Bank Project Manager Mesenbet Shenkutie, the commercial banks have no basis for their refusal except ‘common practices’ they are subverting to fit their narrative.
Considering the sum that Amhara Bank stands to gain, which experts estimate ranges from 420 million ETB to 780 million ETb, Mesenbet affirms that it is unlikely that they are going to accept not receiving any form of interest payment.
As such, the bank has already requested for intervention from the National Bank of Ethiopia while also putting into question the interpretations of the law that requires banks that are under formation to put their paid up capital in closed accounts.
Mesenbet says that such laws exist for the purpose of protecting investors’ money from misappropriation and not as an avenue to avoid paying interests. Senior Executives at the other banks, on the other hand, say that interest rates on closed accounts would not make sense given that banks are not allowed to use that money and make no profit off of it.
Given the contentious nature of the issue, the sum of money involved, the ambiguity of the law, and Amhara Bank’s prospective completion of the formation process, the dispute is most likely going to be settled in the courts.