The Association of Independent Shareholders (ISAN) expressed concern that Asset Management Company of Nigeria (AMCON) gradually gravitates towards a failing government agency.
This is due to the high level of debt in the financial sector, which currently stands at over N16 trillion, and AMCON’s decision to start buying new non-performing loans from banks outside its original mandate.
Sir Sunny Nwosu, the emeritus coordinator of ISAN, said this while speaking to reporters on Nigerian shareholders’ concern over AMCON’s role in sustained depressed investment returns and misinterpretation by the Central Bank of Nigeria for insider credits in banks.
Failure: Nwosu noted that the lack of due diligence on the troubled bank’s bad debts and the appalling management of the agency are the main reasons for AMCON’s inability to turn around the toxic assets. He said:
- “Clearly, AMCON’s failure to live up to expectations has raised serious questions from stakeholders and this press conference is one that calls into question the rationale for the creation of AMCON.
- “We also want to submit that the company’s delay in repaying the ‘toxic’ loans remains of great concern, especially now that the federal government faces declining revenues and challenges in delivering critical capital projects. »
Ongoing litigation: He noted that AMCON currently has around N1.7 trillion in assets under litigation across the country, adding that as of August 2022, the company’s total recoveries are pegged at around N1.4. trillion naira. The agency’s poor recovery prompted most stakeholders to rush to determine the current value of the stockpile of confiscated assetss.
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He said their inquisition followed notoriously unsuccessful efforts by the organization to dispose of the assets.
Nwosu said that with the mandate to acquire toxic loans from troubled banks at a discount, AMCON must dispose of the loans on time and use the proceeds to benefit the national economy.
He said the accumulation of excess debt by the government’s debt collection agency has also become a source of concern for the National Assembly (NASS) as lawmakers seek a new approach to the growing number of unsecured loans. performance of banks.
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- “We are also bothered by debts owed by a few people who have exploited loopholes in current AMCON law to evade payment. The same wealthy people we brought together also lobbied and championed the recent law change establishing AMCON.
- “Currently, 350 businessmen and companies still owe the company N3.6 trillion Naira, or 81% of the N4.4 trillion in total outstanding debts,” said Nwosu.
Position of shareholders: He noted that as concerned shareholders, the group urges the Federal Government and the CBN to address the systemic challenges of the domestic banking sector through a sustainable bailout of the financial sector.
- “Shareholders seriously believe that the floating of AMCON by the Federal Government is a distraction that has prolonged the challenges of the banking sector and must be eliminated with massive intervention of funds as in most developing and developed climates.
- “Our position, as we have said before, is that AMCON has exceeded its duties and urged the CBN to suspend levies on commercial banks.
- “We oppose AMCON’s successful lobbying of the federal government and lawmakers to expand its operations, but our view remains that if CBN is to support AMCON, it should not be done through levies on the banking industry.
- “As shareholders, we are concerned that AMCON will report losses despite collecting huge levies from banks and struggling to sell recovered assets to debtors. The company’s poor performance is serious in our eyes, questions the National Assembly’s recent extension of AMCON’s lifespan.
- “In real terms AMCON’s 10-year lifespan is over, extending its lifespan is playing with taxpayers’ money and shareholders’ money. AMCON is killing the banking industry and the entire financial services industry.
- “Overall, we want the federal government to tighten the noose on debtors and reject the aroma of free funds from banking sector levies, but think about the negative impact of levies on the real sector and the economy”, he said.
Their disappointment: Nwosu said the shareholder’s disappointment stemmed from the fact that the federal government’s debt collection agency had only collected a paltry 1.4 trillion naira since its inception.
He added that on the other hand, available data showed that non-performing loans in the financial sector had increased again by more than 150%.
- “At the start of its operations, the agency purchased 12,743 non-performing loans or eligible bank assets (EBAs) valued at N3.8 trillion from 22 eligible financial institutions (EFIs) for N1.8 trillion. Similarly, the company earned about N327.6 billion from the 0.5% fee on total on-balance sheet and off-balance sheet bank assets imposed on nine banks between 2020 and 2021.
- “AMCON levies on commercial banks have increased from N146.9 billion in 2020 to N180.67 billion in 2021. As part of the rapid response to bad debts in the banking sector, by CBN via AMCON, the debt collection agency also received N125.9 billion. of 12 commercial banks listed on the Nigerian Stock Exchange under the Sector’s resolution funds in the first quarter of 2022.
- “During the same period, AMCON bank charges increased by 29.5%, from N97.18 billion paid in the corresponding period of 2021 to N125.9 billion in the first quarter of 2022.
- “But after 12 years of operation of the agency, Nigerian shareholders have concluded that funding AMCON with levies from commercial banks cannot be continued due to its negative impact on investment returns and the inability of commercial banks to intervene adequately in the real sector of the country.”, he said.