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Managing Director/Chief Executive Officer, Asset management Corporation of Nigeria (AMCON) Ahmed Kuru has said that the Central Bank of Nigeria (CBN), has the power to tweak the charges banks currently pay into a resolution cost fund (AMCON levy), imposed on the industry after a bad loan crises necessitated a bailout for the sector.
Lenders currently pay a charge of 0.5 percent of assets to the fund which is controlled by AMCON and used to help pay down liabilities incurred from acquiring about 12,537 Non-Performing Loans (NPLs) worth N1.7 trillion from 22 financial institutions, following the 2009 banking crisis.
While setting up the trust fund the modelled projection was for Bank assets to grow at about 20 percent per annum, however the reality has been less than 10 percent, leading to a gap in projections versus actual amounts paid by banks into the fund.
In 2016 there was a gap of N180 billion, while it was N202 billion in 2017, according to Kuru.
“The AMCON act, allows the CBN to increase the rate and contributions can run even if the sunset clause is activated,” Kuru told BusinessDay at an event in Lagos at the weekend to unveil the Corporations 2017 Full Year results.
“Payments to the fund is today running at about N120 billion to N130 billion per annum,” Kuru said. AMCON however currently spends N259 billion on interest payments alone to service its N5.6 trillion in outstanding debt obligations to the CBN.
Kuru said AMCON is in the process of dealing decisively with the top assets in its portfolio just as he hinted that Corporation has indeed stepped up its recovery drive in line with its fast approaching sunset.
Going by the new stance, the AMCON MD hinted that all obligors of AMCON especially the politically exposed individuals and business heavyweight who hitherto thought they were untouchable will not be spared in the enforcement process that are being fine-tuned by the recovery agency.
Kuru said, AMCON is determined to pursue every obligor in its book with all the powers the laws avail to deal with each and every one of them especially the 350 debtors of AMCON who account for almost 80 per cent of the over N5 trillion huge debt burden, which must be recovered because AMCON borrowed to purchase the Eligible Bank Assets (EBAs) during the first and second phases when it bought over the bad loans from the banks.
He continued, “Like I said earlier, we will deal with some of those key assets very soon like the Peugeot Nigeria Limited in Kaduna, CDL, Aero Contractors, Arik Air and a host of others. But I must tell you, as we close in on these individuals and entities that owe us, I want you to know that they will call us names, they will blackmail us, and they will threaten us, malign and harass us. However, I can tell you that hard as they will try, we will not be deterred in going about our normal duties as mandated by law.”
On the 2017 Audited Account, which he described as better than 2016, he said although the Corporation was not established to make profit like commercial banks, it could still return to profit this year after losses in 2017 narrowed as the economy rebounded from its worst contraction in more than two decades.
The loss for the year through December improved to N16.4 billion ($45.3 million) from N164.9 billion in 2016. What that meant is that, if the economy continues with a positive outlook as it currently experienced in line with the expectations of the Federal Government, AMCON would be expected to return to profit at the end of the 2018 financial year, according to Kuru.
Gross earnings also increased by 23 per cent to N341.8 billion, led by a 21 per cent increase in interest income to N42.6 billion naira as well as the N41 billion-naira sale of Keystone Bank.
AMCON Executive Director Operations, Aminu Ismail stated that AMCON’s costs were “driven” by an increase in the price of aviation fuel and overhead expenses for two airlines it has taken over, which is Arik Air and Aero Contractors.
PATRICK ATUANYA
