By Peter Egwuatu, with agency report
Some shareholders, yesterday said the huge levies paid by commercial banks to the Asset Management Corporation of Nigeria (AMCON) had stifled the banks’ ability to lend, hence the call for the wind up of the corporation.
They said that the shareholders’ funds were being eroded annually by the sustained operation of the Banking Sector Resolution Cost Fund as observed in the 2014 financial year.
The banking sector resolution cost is a funding-pool agreed upon by commercial banks to mitigate the challenges that the nation’s banking sector may face as occasioned by the 2008/2009 global economic recession. Investigations by NAN showed that seven commercial banks contributed N56.42 billion to AMCON in 2014. Some of the shareholders told NAN in separate interviews in Lagos on Monday that the banks’ contributions to AMCON were making their stocks unattractive to investors due to dwindling and unimpressive dividends.
Mr. Boniface Okezie, the National Chairman, Progressive Shareholders Association of Nigeria (PSAN), said that the shareholders were worried by AMCON’s resolutions regarding what the banks should contribute. Okezie said that the banking stocks were no longer attractive to both local and foreign investors because of decreased dividends, concerns over regulatory penalties and threats to banks shareholders’ funds. According to him, strict regulatory policies and levies have made it difficult for banks to lend to the real sector of the economy.
Okezie said that commercial banks would have declared higher dividends in 2014 if not for various levies paid to regulators, especially, AMCON. He also identified the Central Bank of Nigeria (CBN) headwinds and compulsory levies charged by AMCON in 2014, as other major challenges that made it difficult for the banks to intermediate in the economy and create value for investments. Okezie alleged that AMCON had overstayed its usefulness and should wind down its operations, as it was daily becoming a burden to the Federal Government. “AMCON should close shop and should not continue to exist to the detriment of the shareholders and the national investment,” Okezie said.
Also, Mr. Sunny Nwosu, the National Coordinator, Independent Shareholders Association of Nigeria (ISAN), said that the shareholders were groaning under poor dividends and low capital appreciation while AMCON was collecting 0.5 per cent of banks’ total assets annually.
He said that this had made most of the banks that contributed to AMCON unable to declare dividends during the period under review. Nwosu also said that the banking sector was over regulated and called for a review of the various policies introduced by the CBN in the interest of the economy.