We will oppose any move that lures AMCON to acquire new debts from banks – House

Chairman of House of Representatives Committee on Banking and Currency, Jones Chukwudi Onyereri, says the House will not be lured into supporting the deceptive plot orchestrated by some people to lure Asset Management Corporation of Nigeria (AMCON) to purchase new debts from Deposit Money Banks (DMBs).
Onyereri, who addressed his colleagues in Enugu State at the opening of the retreat for lawmakers declared open by Governor Ifeanyi Ugwuanyi of Enugu State, said the members argued that it would not be the right decision for the country considering the state of the economy.
“We are also aware that some economists are clamouring for AMCON to buy more toxic assets from the Eligible Financial Institutions (EFIs) in view of the very high level of the non-performing loans that are worse than the 2009 experience and far above the regulatory threshold. We wish to sound a note of warning that this Committee will not; I repeat will not support any such move. At least not at a time like this in the history of our economy,” Onyereri said.
According to Onyereri, the lawmakers are happy that AMCON as an interventionist institution of the Federal Government has performed above board since it was created, but are worried that the Corporation is often constrained by institutional and legal stumbling blocks from achieving optimum results.
He said that was why the House in 2015, amended certain parts of the AMCON Act to further strengthen the institution – which included the establishment of the resolution sinking fund.
Ahmed Kuru, managing director/CEO of AMCON, disclosed to the committee that the Corporation’s recent assessment of obligors as of December 31, 2016, identified 350 accounts with a current exposure of N2.5 trillion that represented about 80 percent of AMCON’s total obligor debt.
“AMCON has also repositioned its debt recovery approach to strengthen legal and credit restructuring units to collaborate on the aforementioned 350 accounts termed “defaulters”; enhance the restructuring and turnaround team; and engage in asset tracing to enhance recovery.” “In spite of the difficulties,” Kuru said, “AMCON continues to persevere in the face of adversity.”
Providing additional insight into the challenges of AMCON, Kuru said the ramifications for failure by AMCON to recover its debt, principally owed to the CBN, cannot be quantified as it goes beyond economic cost.
According to Kuru, in the last two years, AMCON debt repayment to the CBN were N456.4 billion and N517.7 billion but actual payments were N256.7 billion and N191.1 billion in 2015 and 2016, respectively.
In his words, “This translates to a funding shortfall of N199.7 billion and N326.4 billion in 2015 and 2016, respectively. Of this shortfall, repayment due from AMCON in 2015 and 2016 represented 42 percent and 53 percent while the resolution cost fund represented 58 per cent and 47 per cent in 2015 and 2016, respectively. The funding plan envisaged contribution of 70 percent from the resolution cost fund and 30 percent from recovery.”