Reps plan N500bn bail out for ailing banks
BY BEN AGANDE & EMMA OVUAKPORIE
ABUJA — THE House of Representatives has concluded plans on a bill for the establishment of a fund into which the Central Bank of Nigeria, CBN, will contribute N500 billion to bail out ailing commercial banks in Nigeria.
The Fund to be known as “Resolution Cost Fund” would draw its financing from contribution of commercial banks, which the bill would ask to contribute 0.3% of their annual assets.
Towards this direction, the apex bank is to contribute N50 billion per annum to the Fund which would have a lifespan of 10 years.
The bill states: “There is, hereby, established a Fund to be known as the Banking Sector Resolution Cost Fund which shall be domiciled with the CBN and shall be constituted by and made up of banking sector resolution cost imposed and levied under this Act.
“The Resolution Cost Fund shall have a lifespan of 10 years and on the expiration of its lifespan, the Resolution Cost Fund shall be wound up in accordance with this Act.
The bill, titled ‘A bill for an Act to amend the Asset Management Corporation Act, 2011” , sponsored by Rep Ogbuefi Ozomgbachi (PDP, Enugu State) sought to give the CBN legal backing to provide N500 billion in 10 years at the rate of N50 billion per annum to the Resolution Cost Fund.
However, during the debate on the general principles of the bill, lawmakers expressed reservations. Rep Asita Honorable (PDP, Rivers State) said Nigeria was facing multi-farious problems, including decay in education, health and other important sectors which the N500 billion could solve and “public money should not be used to fund some people’s recklessness.”
Reps argued that the CBN did not need to put more money to fund banks and suggested that the banks should rally together and make the money available since they were privately-owned institutions.
“The N622 billion that was used to bail them out should be used now to replace the N500 billion fund they are looking for,” said Rep Samson Osagie (ACN, Edo).
