By Rosemary Onuoha
Experts in the financial sector have kicked against the recent move by the Asset Management Corporation of Nigeria (AMCON) in buying all non-performing loans (NPLs) in the banking sector, saying that buying all loans without liaising with the debtors is a dangerous precedent.

According to the experts, a lot of dispute is likely to arise that will consequently force some bank debtors to take AMCON to court and the matter might drag on for ages, causing the motive for setting up AMCON to be defeated.

Recently, the Central Bank of Nigeria said that AMCON had bought all NPLs in the banking sector.
However, it would be recalled that many bank customers rejected the figures that were announced by the CBN when the debtors were initially made public, yet the figures were never reconciled between the CBN and the debtors.

Mazi Okechukwu Unegbu, MD, Maxifund Investment Ltd, told Vanguard that since there are disputes concerning actual amounts owed by some bank customers, AMCON should have cleared that dispute before buying off NPLs.

“Since there are disputes, AMCOM should clear such disputes to be able to do anything, otherwise by the time these customers go to court, the matter might drag on for a long time.”

Unegbu also stated that AMCOM has not put forward any guideline or regulation for which it is purchasing the NPLs, stating “The question is, what are the terms and conditions for buying off these loans? Where is the regulation or guideline guiding the AMCON Act? There is none yet, instead all we have seen so far are technicalities that most debtors might not understand.

“Assuming I owe N10 and the bank now send N100 to AMCON, how am I liable for N100 when I know that what I owe is N10? So I think that it is not right for AMCON to just buy off the loans from the banks without liaising with the debtors because I foresee series of litigations that might come up in the future.

Also, the MD of TrustYield Investment Limited, Mr. Rasheed Yusuf, stated that AMCON is not handling the NPLs issue in a professional manner as what they are doing is a one directional transaction that will not help most of the bank debtors.”

“It would be recalled that the Director, Banking Supervision, CBN, Mr. Sam Oni, said that the corporation had made tremendous progress in terms of purchasing the non-performing loans of the banks.

Oni said that the first round of the purchase of non-performing loans that was done was actually restricted to margin lending by intervened banks and NPLs of those intervened banks, but limiting the purchase of the loans that they bought from the non-intervened banks to only margin loans. They have now gone round to purchase all NPLs from all the banks.

Oni added that the apex bank would target a total NPL ratio of 5 per cent across the sector.