By Tordue Salem
ABUJAâ€”THE Ministry of Finance, yesterday, said that toxic assets from banks have grossed N1.5 trillion, even as Chairman of the Nigerian Deposit Insurance Corporation, NDIC, revealed that the banks were burdened with bad loans to the tune of N450 billion.
The Ministry and the NDIC spoke at a public hearing organized by the Rep. Ogbuefi Ozomgbachi-led House of Representatives Joint Committee on Banking, Capital Market and Finance on a Bill to establish an Asset Management Corporation, AMC, sponsored by the Ministry, the Central Bank of Nigeria and the Securities and Exchange Commission, SEC.
The permanent secretary who represented the Minister of Finance, Dr. Mansur Muhtar said the Ministry was in full support of the Bill, which seeks in a nutshell to manage assets of banks and other financial institutions for a minimum period of 10 years.
The AMC is also expected to intervene, on behalf of government, to salvage banks that are on the verge of collapse or insolvent, though most members of the Joint Committee on Banking and Currency, Capital Market and Finance kicked against the CBN policy of always being there to pull banks going under for unethical practices.
The AMCâ€™s â€œkick-offâ€capital of N10billion is expected to come from the CBN and the Ministry of Finance. When passed into law, the Bill is expected to empower the corporation to list all banksâ€™assets, exercise the right to sue affected banks for breaches in assets declaration and glean off toxic assets on their balance sheets to ensure efficiency and transparency.
While giving the ministerâ€™s position on the Bill, the Ministry claimed that banksâ€™ toxic assets after the reconsolidation had netted a whopping N1.5trn, nearly the entire budget for the 2010 fiscal year.
Support for the Bill
The NDIC chief, who also announced the corporationâ€™s backing of the Bill, put the banksâ€™bad loans at over N450billion.
In an earlier speech, the CBN Deputy Governor who represented his Principal, Sanusi Lamido Sanusi, and responded to questions on behalf of CBN and other stakeholders, said: â€œIt is important to say that the N10billion kick off capital for AMC will come from the CBN and the Ministry of Finance.â€
He said the law establishing the AMC would also seek the Attorney Generalâ€™s fiat in dealing with litigations arising from those who may be affected by its regulations and activities. The Bill would be read for the third and last time in the House of Representatives after its final consideration by the Committees.