From Uche Usim, Abuja
Frustrated by the slow legal proceedings in the country, the Asset Management Corporation of Nigeria (AMCON) has approached the National Assembly to accommodate it in the provisions of the newly amended BOFIA Act 2020 in its quest to recover outstanding N5.4 trillion debt.
The Act sets up Special Tribunals for hearing financial matters emanating from the financial institutions.
Making a presentation before the Senate Committee on Banking, Insurance and other Financial Institutions at the National Assembly on Wednesday, Mr Ahmed Kuru, Managing Director/Chief Executive Officer of AMCON said that the proposed amendment and a few others will be critical to AMCON’s expected deliverables, as they would enable the Corporation resolve various debts very quickly.
According to him, it is worrisome that if AMCON disposes of all the assets securing the loans, it can only realise slightly above N1 trillion with the liability in excess of N5.4trillion. He noted that the AMCON Act encourages asset tracing for accounts for the gap, plus contributions from the financial institutions including the CBN.
He, however, regretted that currently, the contributors have not been able to meet the expected yearly amounts, which he said is mainly due to the fact that the assumptions have not materialized. Therefore, the only remedy is to provide an inbuilt legal mechanism whereby they continue to contribute in addition to recoveries until the whole debt is paid, otherwise the obligation falls on taxpayers, Kuru concluded.
The Senate Committee chaired by Senator Uba Sani had invited AMCON top executives and that of other key stakeholders/sister agencies of the Federal Government including the Central Bank of Nigeria (CBN), the Ministry of Finance and the Nigeria Deposit Insurance Corporation (NDIC) for another engagement for a continued interaction regarding the amendment of the Asset Management Corporation of Nigeria Act No.3 (Amendment Bill) 2021 with the Senate Committee on banking insurance & other financial institutions.
Kuru said; “By the following introduction of new sections, the Corporation is seeking to be accommodated by the provisions of the newly amended BOFIA (2020), which sets up Special Tribunals for hearing financial matters emanating from the financial institutions.
“AMCON being accommodated under this Tribunal will assist AMCON with its speed of recovery”.
Kuru noted that AMCON was seeking intervention of the National Assembly in areas like; the cessation of the resolution cost fund/defined tenure; dissolution date of the Corporation, recovery through special tribunal for enforcement and recovery of eligible loans as well as certificate of Sale of Certificate of Transfer as a valid registrable instrument for AMCON.
Providing justification on the proposal, Kuru reminded the Committee that Section 61 (b) in ascribing a tenor for the operation of the Resolution Cost Fund describes same as a period of 10 years from the calendar year 2010 but may be extended by not more than a maximum of five years by the National Assembly. This, he said, was done under the assumption that the debt obligations will be extinguished within 10 years.
“The effect of the above description therefore is that the tenor ascribed for the life of the Resolution Cost Fund has elapsed by time. Going by this, the tenor expired in December 2020. The need for the amendment of the provision of the Act therefore becomes inevitable towards ensuring a sustained operation of the activities of AMCON,” Kuru stated.
AMCON purchased 12,743 NPLs or EBAs worth N3.8 trillion from 22 Eligible Financial Institutions (EFIs) for a purchase price of N1.8 trillion. The purchases are covered by various collaterals. Of this number, AMCON has so far resolved about 4,000 EBAs while more than 8,000 EBAs are still outstanding. AMCON has also mapped out about 6,000 accounts for the Asset Management Partners (AMPs.)
The Corporation had to inject a total sum of N2.2 trillion to 10 Nigerian banks – bridged and owned banks (intervened banks) – bringing Net Book Value (NAV) to Zero. The Corporation recently took over Skye Bank (now Polaris) under the bridged bank concept of the CBN and NDIC. The Bank had stabilized and operated efficiently.