AMCON to pay N1trn debt in October

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Recovers 50% non performing loans

BY JOHNBOSCO AGBAKWURU & JOSEPH ERUNKE

ABUJA—THE Asset Management Corporation of Nigeria, AMCON, said yesterday that it would pay a total of N1trillion of its debts in October, 2014, just as it disclosed that it has so far recovered 50 percent of the non performing loans.

The Managing Director of the Federal Government agency, Mustafa Chike-Obi, spoke at a one-day public hearing on the Asset Management Corporation of Nigeria Act, 2010 (Amendment) bill, 2014, organized by the Senate Committee on Banking, Insurance and other Financial Institutions.

“I want to say that these were debts that the banks had given up on. Some of those debts were between seven and 10 years old,” he said. He noted that the organization, in December 2013, paid off  a total of “N1trillion of its debts well ahead of schedule”, saying the development was due to the huge success in the restructuring and recovering debts.

“In December 2013, because of the huge success in restructuring and recovering debts, we have been able to pay off N1 trillion of our debts well ahead of schedule. We also plan to pay off an additional N1 trillion of debts in October 2014, which will reduce AMCON’s indebtedness by 30 per cent in the first four years of operation,” he added.

The Asset Management Corporation of Nigeria Act, Amendment bill, 2014, presently before the National Assembly, is seeking amendment to allow commercial banks in the country contribute an amount equivalent to fifty basis points of their respective total assets to the Resolution Cost Fund annually.

The Resolution Cost Fund is an agreement between the Central Bank of Nigeria and the commercial banks as proposed in section 65 of the bill. The fund seeks to meet the obligations of AMCON arising from debt securities issued in an event where the corporation is unable to meet up payments from proceeds generated through sale of acquired assets from banks.

Speaking at the event, Senate President, David Mark, who was represented by the Senate Leader, Victor Ndoma-Egba, said: “Although AMCON believes that it is positioned to meet its obligations arising from the debt securities issued by it from its various sources of income, the Resolution Cost Fund will act as an additional safety net.”

He further noted that the fund, if established will ensure that any future banking resolution costs, which may arise as a result of any financial mismanagement by the banks, will not be borne by taxpayers, but rather by the banks with money from the fund.
He also called for wide-ranging consultations with various key institutions and stakeholders in the sector, including policy makers, other legislators and members of the public to enable it have a clear vision on the AMCON bill.

 

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