A nationalization of a bank of issue carried out in a soft way: the case of the establishment of the Bank of Ethiopia
The Bank of Abyssinia, a private financial institution established in 1905 in Cairo under Egyptian Law, was given a 50-years concession for carrying out banking activity in Ethiopia by the Emperor Menelek II. This institution was engaged in issuing notes as well as in any kind of commercial banking business. The Emperor Haile Sellassie, after acceding to the throne in 1930, could not accept that the only country’s issuing bank was a foreign-owned share company and decided for nationalization. The institutional change was implemented, however, in a soft way, providing an adequate compensation to shareholders, and in agreement with the main foreign shareholder, the National Bank of Egypt. The Bank of Abyssinia went, therefore, into liquidation and a new institution, the Bank of Ethiopia, was established in 1931. The new bank, although under full Government control, retained management, staff, premises, clients and activity of the ceased financial institution. Italian occupation of the country, in 1936, brought the liquidation of the Bank of Ethiopia.
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