Bank inspectors and internal auditors have a critical role to play in the successful operation of the Asset Management Company of Nigeria, says Mahmoud Alabi, Group Managing Director /Chief Executive, Intercontinental Bank Plc.
Asset Management Company of Nigeria (AMCON) was set up by the Central Bank of Nigeria (CBN) to purchase the bad debt of banks thus injecting liquidity into the banking system.
Addressing bank inspectors under the aegis of Committee of Chief Inspectors of Banks in Nigeria, Alabi stated, “AMCON’s success will depend on compliance, integrity and adherence to Good Corporate Governance and transparency. And hence, AMCON’s success has a lot to do with how you people gathered here this morning, effectively carry out your functions as inspectors and internal auditors’’.
In a paper titled Operational Modalities of Asset Management Corporation of Nigeria (AMCON): Implications for the Nigerian Banking Industry, Alabi highlighted the role bank inspectors are expected to play as: compliance with laws, regulations and contracts; Reliability and integrity of financial and operational information; Safeguarding of assets; and Effectiveness and efficiency of operations.
He said, ‘’The Assets Management Corporation of Nigeria Act, 2010 was recently signed into law by the President of the Federal Republic of Nigeria, Dr. Goodluck Ebele Jonathan. As inspectors of banks, you have the responsibility to ensure that your banks comply with these acts as it relates to your organisation.
‘’As inspectors and internal auditors of banks, you have a role and responsibility to ensure that these guidelines are complied with. The totality of the AMCON Act, taken as a whole or in part puts much responsibility on compliance, on corporate governance and integrity. These are your key functional areas as inspectors and internal auditors. So in a way, the success of AMCON initiatives lies crucially on how you perform your roles in your respective banks.
‘’AMCON recently announced what constitutes eligible assets to be taken over from rescued banks and cleared banks in pursuant of the AMCON Act, Part IV Sec. 25 (1)
‘’The Board of Directors at the end of the Board meeting reiterated that Non-Performing Loans (NPLs) backed by shares of listed companies will be valued at premium of approximately 60 per cent on the 60-day average of recent prices ending November 15th 2010.
‘’Apart from this, it was stated that “for non-performing loans (NPLs) backed by other perfected collateral, AMCON will accept the most current estimate of the loan value supplied by the institution”.
‘’The estimate must be based on current market analysis of the collateral and a written guarantee of good faith by the institution. Chief Inspectors have a role to play here; information supplied by eligible banks for the purpose of these transactions should be such that can stand the test of reasonableness even by independent parties.
With respect to pricing of toxic assest, ‘’the issue under discussion here are TOXIC ASSETS but part of these are going to be converted to funds. As Chief Inspectors, you are not only expected to ensure that these assets are properly priced but you are expected to ensure that payments are duly made.