Whereas, it’s crucial to set prudential limit that keep the maximum loss that a bank could face in the event of an unprecedented counterparty failure to a level below which the bank’s financial soundness is not jeopardized;

Whereas, it is important to ensure that banks have adequate policies and procedures in place to promptly detect, quantify, assess, track, report, and manage or reduce risk concentrations;

Now, therefore, in accordance with article 22 (1) and article 66 (2) of the Banking Business Proclamation No. 592/2008 (as Amended by Proclamation No.1159/2019), the National Bank of Ethiopia has issued this Directive.