Asset Management Company AMCON, an agency set up six years ago to take on non-performing loans in banks and rescue the nation’s banking industry from systemic collapse may begin to lease out properties seized from companies that are failing to repay loans as it grapples with cash crunch.
AMCON, it was learnt, may introduce the “real-estate investment scheme” by the end of the year to raise money to meet its bond repayments, Chief Executive Officer Ahmed Kuru said in an interview. “It plans to sell the properties when the economy improves and the assets can attract fair value,” he said.
“The agency is confiscating more assets than its receiving from its recovery efforts as businesses battle to sell products and generate cash”, Kuru added. Companies that owe money to AMCON are struggling to meet their debts as the Nigerian economy heads for a recession because of a slump in crude prices that crippled foreign-exchange supplies.
AMCON has no plans for another rescue package for banks and is focused on how it will repay N5.2 trillion of outstanding bonds over the next nine years, he said.
The agency purchased about 14,000 non-performing loans at a cost of N3.9 trillion in a government-led bailout of ten banks following the 2009 banking crisis.
A levy that sees banks pay 0.5 percent of their assets annually generates as much as N190 billion for AMCON and is helping the agency fill funding gaps, Kuru said.
Kuru said the shortfall widens as the downturn in the economy causes the price of assets to fall below their book value, making sales difficult, “We are in the second phase, which is redemption of our debts, not bailing out banks,” Kuru said, adding “We are not in the perpetual business of bailing out banks.”
Nigerian regulators last month replaced the management and board of Skye Bank Plc and provided the nation’s 10th-largest bank with a loan to bolster capital levels that had dropped below requirements. There are “a few” other banks that are probably not meeting prudential ratios in terms of liquidity, or bad loans or capital, Tokunbo Martins, the Central Bank of Nigeria’s director of banking supervision, said last month in a Channels Television programme. The sale of Keystone Bank Ltd., the biggest of three banks nationalised after the 2009 crisis, is in the “final stage” and it will probably be sold this quarter, Kuru said. Sterling Bank Plc said last month it withdrew a bid to buy the bank, which has assets of 318 billion naira and two international units, over price negotiations.
“Our activity here is directly linked to the economy,” Kuru said, stressing;The combination of the economy picking up for the banks and also for the obligors will help Amcon meet its objectives and wind down in 2023 as planned.”