Commercial Bank of Ethiopia recovers some of the money lost in technical glitch

On Tuesday, Abe Sano, the head of the Commercial Bank of Ethiopia (CBE), reported that some of the money had been successfully recovered, following a system glitch which allowed customers to withdraw cash freely at ATM machines and electronic transfers. According to the Bank, thousands of customers voluntarily returned the funds, while Mr. Sano issued a warning that those who haven’t complied will face criminal charges. Most of the withdrawn funds were attributed to university students. The incident came to light on March 16, with news of the glitch spreading rapidly across universities primarily through messaging apps and phone calls, leading to long queues at campus ATMs. While the bank did not provide detailed explanations regarding the glitch, the CBE assured that it was not a result of a cyber-attack, reassuring customers about the security of their personal accounts.

The bank further stated it has identified the root cause of the system glitch. Provided the evidence is clear, no one inside the bank has yet been identified publicly with the fault. Although sources do not discount intentional malfeasance and even sabotage. The BBC report appears to say there was an intentional illicit transfer of funds to select groups or individuals. The investigation did not reveal this assumption however. The government would likely keep the investigation abreast, shielding the bank from further reputation risk. In a press statement, Mr. Sano said, “the bank will do everything possible to restore trust in the coming weeks and months”.

Despite the recent controversy, CBE has made rapid strides in recent years, first to improve its balance sheet by restructuring non performing assets, non performing loans made to state owned enterprises in the previous two decades. The reorganization is part of the national drive to restructure the economy. The bank is currently undergoing rapid digitalization. 

Several universities have issued statements urging students to return any funds they may have withdrawn from the bank erroneously. In an interview with the BBC’s Newsday program last week, Mr. Abe stated that the ‘CBE was actively engaging with law enforcement to report customers involved in the incident’. He emphasized that the digital nature of transactions made it impossible for culprits to evade detection, as the bank possesses records and can identify them. Initially, media reports suggested a loss of over millions of dollars due to the technical glitch, but the bank did not provide a specific number. According to a CBE employee interviewed by the BBC, tracing money transferred to other banks is more challenging compared to funds moved within the CBE system. Prior to the realization of the issue, a total of 490,000 transactions had been processed. The CBE, established 82 years ago is Ethiopia’s biggest bank serving 46 million account holders.