Capital Inadequacy of Commerical Bank of Ethiopia Alarms GovernmentJanuary 17, 2017 - A shocking decline of the Capital Adequacy Ratio (CAR) at the largest state-owned bank, Commercial Bank of Ethiopia (CBE) – currently at the lowest critical level of four percent – has prompted the government to deposit a security bond worth 26.5 billion birr, according to Reporter. If approved, the Ministry of Finance and Economic Cooperation (MoFEC) will issue the security bond that will raise CBE's total capital to 40 billion birr. After the capital injection, CBE’s CAR is expected to rise significantly to 13.2 percent, well above the acceptable international minimum standard of 8 percent. A staggering fall of CBE's Capital Adequacy Ratio (CAR) is among the main factors. CAR is a worldwide measurement to gauge a bank's capital in relation to its risk weighted assets and current liabilities.

Source: Ethiopian News January 17, 2017 22:33 UTC