By Emmanuel Aziken
Nigerian banks are being owed an estimated N1.6 trillion by local oil and gas companies it was disclosed yesterday. Senator Nkechi Nwaogu, Chairman of the Senate Committee on Banks, Insurance and other Financial Institutions at a briefing Thursday said the establishment of the Asset Management Corporation, AMC, would help to reduce the level of such debt overhang she claimed had paralysed credits to the economy by the banks.
Need for Asset Management Corporation
Canvassing the need for the establishment of the AMC, Senator Nwaogu also disclosed that the 10 banks whose chief executives were recently sacked had an estimated N1.3 trillion non performing loan portfolio.
Besides, she disclosed that the 10 banks had a total deposit base of N950 billion which would otherwise had been at risk but for the guarantee provided by the Federal Government that no bank would be allowed to fail.
â€œThe AMC is simply a conduit through which the government has thought it wise through the Central Bank and the Ministry of Finance to relieve and reduce the toxic assets of the banks,â€ she said yesterday.
Noting the debt burden on the 10 banks who failed the Central Bank audit last year, she said: “The 10 banks as at September last year had a total non performing loan of about N1.3 trillion and within the same period the entire oil and gas sector are owing the entire banks a total of about N1.6 trillion,â€ she continued.
â€œIf this situation is allowed without any intervention it could lead to a collapse of the banking institutions.â€
â€œWe know the effect of allowing a bank to go down, therefore the establishment of Asset Management Corporation is intended to relieve our banks of these toxic assets by discounting them, putting back liquidity into the banks and these toxic assets will now be handled by this corporation.â€
â€œAll the recovery strategies that the banks still do, they will still do but it will relieve these banks of this debt overhang, it will bring into the banks liquidity, it will clean the balance sheets of these banks, it will help to revitalize the capital market and we in the committee we feel that we need to explain more the benefits of its establishment.â€
Explaining the committeeâ€™s inclination for a specialized financial crimes court, she said: â€œWe think that a commission or a court of such competence or a specialized court that can try expeditiously financial crime offenders because as you are aware some of the CEOs took advantage of the judicial lapses,â€ she said as she lamented what she described as the effrontery of the CEOs suing the Central Bank for the revocation of their licenses after running their banks to the ground.
â€œWhen these banks are unable to meet their day to day obligations as a banking institution, they can never be called a bank anymore, so there is no duplication anywhere.â€
On the risks accruing from the ten banks who failed the CBN special audit last year, she said: â€œThe ten banks as we have them whose special audit examination did not go well, they have over N950 billion depositors funds at stake but thank God with the initiative of the present government they have guaranteed that no bank will be allowed to fail.
The establishment of the AMC will ensure that people can go to any of these banks and anytime and put in their money without fearing that something will happen to them tomorrow or next tomorrow.â€