Licensing and Supervision of Banking Business

Limits on Board Remuneration and Number of Employees Who Sit on a Bank Board

(as Amended) Directive No. SBB/67/2018

WHEREAS, a sound corporate governance is vital for the health of individual banks and the banking sector as a whole;

WHEREAS, it is necessary to periodically review that remunerations paid by banks to directors are fair and contribute to safety and soundness of the banking system;

WHEREAS, there is a need to separate board and executive functions, so as to ensure proper checks and balances, in banks;

NOW, THEREFORE, in accordance with paragraphs “e” and “f” of sub-article 4 of article 14 of Banking Business Proclamation No. 592/2008, the National Bank of Ethiopia hereby issues this directive.

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1. Short Title

This Directive shall be cited as “Limits on Board Remuneration and Number of Employees Who Sit on Bank Board (as Amended) Directive No. SBB/67/2018”.

2. Definitions

For the purpose of this Directive, unless the context provides otherwise:

2.1 “Bank” means a company licensed by the National Bank of Ethiopia to undertake banking business or a bank owned by the Government;

2.2 “Board allowance” refers to an amount of money that is paid in kind or in cash from any account of the bank to directors to cover incidental costs related to their board membership;

2.3 “Board compensation” refers to any money other than board allowance that is paid, in cash or otherwise, to a director from the bank’s net profit;

2.4 “Director” means any member of the board of directors of a bank, by whatever title he may be referred to;

2.5 “Employee” means a chief executive officer, a senior executive officer or any other person who is appointed or hired by a bank to carry out its day-to-day operational activities; and

2.6 “Remuneration” includes board compensation and allowance paid to each director.

3. Scope of the Directive

This directive shall apply to all banks operating in Ethiopia.

4. Remuneration of Directors

4.1 Annual board compensation to a director shall not exceed Birr 150,000 (One Hundred Fifty Thousand Birr).

4.2 Monthly allowance paid to a director shall not exceed Birr 10,000 (Ten Thousand Birr).

4.3 No bank shall pay any financial or otherwise remuneration or benefits other than those stated under sub-articles “4.1” and “4.2” of this article in whatsoever form to its directors any time.

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Footer information:
ADDRESS: SUDAN STREET P.O.BOX 5550/2048 FAX No. 0115 51 45 88 TEL. No. 0115 51 74 30 ADDIS ABABA TELEGRAPHIC ADDRESS: NATIONBANK TELEX 21020 CODES-USED PETERSON 3rd & 4th ED BENTLEY’S 2nd PHRASE A.B.C. 6th EDITION E-mail: nbe.excd@ethionet.et Website: www.http://www.nbe.gov.et ```

(Note: The document contains two pages. The second page continues the definitions and introduces sections 3 and 4. All content has been transcribed verbatim, preserving headings, lists, and formatting. No summaries, translations, or commentary have been added.)

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NATIONAL BANK OF ETHIOPIA

ADDIS ABABA

የአ.ት.የ.አ.ያ በስልራዊ ባንክ
NATIONAL BANK OF ETHIOPIA
/.

5. Number of Employees Who Sit on Bank Board

No employee of a bank be it permanent or contractual, shall sit on the board of any bank.

6. Repealed Directive

Directive No. SBB/63/2016 is hereby repealed and replaced by this directive.

7. Effective Date

This Directive shall enter into force as 29th day of August, 2018.

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Yilma Dessie (PhD)
Governor

(Seal: NATIONAL BANK OF ETHIOPIA)

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አድራሻ፡ ሱዳን ጎጆና ፖ.ባ.ኤ. 5550/2048 ፋክስ ቁጥር 0115 51 45 88 ካልእ ቁጥር 0115 51 74 30 ADDRESS: SUDAN STREET P.O.BOX 5550/2048 FAX No. 0115 51 45 88 TEL. No. 0115 51 74 30 ADDIS ABABA TELEGRAPHIC ADDRESS: NATIONBANK TELEX 21020 CODES-USED PETERSON 3rd & 4th ED BENTLEY'S 2nd PHRASE A.B.C. 6th EDITION E-mail: nbe.excd@ethionet.et Website: www.http://www.nbe.gov.et