The Senate Committee on Banking, Insurance and other Financial Institutions has revealed that Assets Management Company of Nigeria, which was launched by the government to buy back bad debts by banks is now a drain on Nigeria’s economy.
According to the committee, something has to be done to change this.
In a recent statement issued in Kaduna at the end of a retreat organized by AMCON, Chairman of the Senate Committee on Banking, Insurance and other Financial Institutions, Senator Uba Sani disclosed that the committee will reach out to the executive arm of government to tackle the AMCON challenge.
His words, “After sinking the humongous Nigerian resources to the tune of N4 Trillion into taking over non-performing loan assets of banks, AMCON today only boasts of N800 billion assets”.
He hailed PMB for launching a Task Force for the recovery of the over N5 Trillion indebted to AMCON and signing into law the AMCON (Amendment)Act 2019 which gave “sweeping powers to the corporation to monitor activities of the Nigerian debtors to ensure they do not unduly take advantage of the weakness in the country’s banking systems”.
Shehu believes the Committee will close ranks with AMCON in the compilation of “a comprehensive list of Nigeria’s high-profile debtors and proceed to publish without delay, their names, “except the persons in question commence immediate repayment of their loans.”
Do you agree?
Asset Management Corporation of Nigeria (AMCON) is a body established by the Act of the National Assembly of Nigeria in July 2010 with an intended 10 years lifespan. The concept is in consonance with the operation of the National Asset Management Agency of the Republic of Ireland and Malaysia Pengurusan Danaharta. The body acted as the buyer of banks for the Nigerian Government by acquiring the non-performing loans (NPL). The original book value of the acquired NPLs was ₦4.02trillion at a price of ₦1.76trillion with a commensurate issue of Zero Bond for the NPL acquired.
As a result of global financial crisis and domestic events, the federal government of Nigeria through the operation of Central Bank of Nigeria conceptualized the idea for the establishment of a body that will prevent the looming financial crisis in the country. At the time of the establishment of this corporation, the body identified 10 banks with crisis in system asset and responded by the injection of ₦736 billion liquidity to buy up their assets. Among the 10 banks only three banks were unable to meet up and were finally acquired by AMCON and tagged as Bridged Banks: Mainstreet Bank, Keystone Bank and Enterprise Bank. In 2013, the management of the International Monetary Fund through their report advised the Federal Government of Nigeria to stop the operations of AMCON in order to avoid future financial challenges. The founding Managing Director of the organisation was sacked by President Muhammadu Buhari because the presidency believed that sales of acquired banks lack transparency.
The Act establishing the body permits, as part of its operation to set aside a sinking fund with an annual ₦50 billion contribution by the Central Bank of Nigeria and 0.3% of total asset value of all the commercial banks over the useful life of the corporation. The money from this fund would be used to purchase FG securities and the returns from this investment will be returned to the account and then redistributed among the contributing commercial banks. The fund is administered by consortium of members from the participating banks which will be rotated annually to allow even participation among the participating banks. The House of Representatives of Nigeria in his submission in 2015, queried the excess debt accumulation by the body.
Support InfoStride News' Credible Journalism: Only credible journalism can guarantee a fair, accountable and transparent society, including democracy and government. It involves a lot of efforts and money. We need your support. Click here to Donate