Reps: AMCON to get terminal date soon to ensure effectiveness

… considers shame list of defaulting obligors

Committee on Banking and Currency on Tuesday disclosed plans to fix specific timeline for Assets Management Corporation of Nigeria (AMCON) to wind-down in line with the adopted Malaysian model.

In the bid to strengthen the Corporation, other financial experts drawn from Central Bank of Nigeria (CBN) and Nigerian Deposit Insurance Corporation (NDIC) who converged at the public hearing on the bill that seeks to expand the AMCON board, also endorsed the proposed amendment to empower AMCON to name and shame defaulting obligors.

According to Kola Ayeye, AMCON executive director, 80 percent of exposure were owed by 130 obligors financially equipped to institute legal actions against the Corporation, hence frustrating the recovery of the toxic assets bought by the Corporation from the financial institutions.

Ayeye, who urged the National Assembly to strengthen and shield the Corporation from financial penalty, however noted, “these obligors are able to make away with this money if AMCON is not protected.”

While noting that N22 trillion was in circulation in the Nigerian market, the AMCON representative urged the House to prioritise professionalism in the bid to expand the board of AMCON rather than just consideration of representation across the six geopolitical zones.

He observed that out of the N4 trillion assets absorbed by the Corporation, N700 billion are related to Energy sector adding that the larger chunk of the recoveries running to several billions of naira made so far were from fuel subsidy and exchange differentials from oil marketers.

According to Ayeye, the success recorded was sequel to the directive issued by Kemi Adeosun, minister of finance in 2015, that all the defaulting obligors should get clearance from AMCON before being paid the outstanding fuel subsidy.

He also solicited for the support of the National Assembly to recover the debts owed by the top 50 obligors who have over N1 billion each domiciled in various deposit backs across the country.

While in support of the need to guide against any action that could affect easy of doing business in Nigeria, the Corporation emphasised the need to protect depositors’ funds, which were borrowed by the defaulting obligors from the banks.

On his part, Kofo Alada, CBN’s head of legal department who noted that all the instruments including loans, equity and bonds acquired by AMCON have terminal date, hence there was no need to stipulate the terminal date.

He noted that major issues of contention for AMCON are Land Use Act and the post-acquisition plan.

While expressing support for the inclusion of naming and shaming of defaulting obligors, Alada argued, “most of the obligors are super power.”

He maintained that the amendment should state that directors of licensed banks and microfinance banks who are financial exposure (non-performing loans) in any of the banks should be exempted from being appointed into the Board of AMCON to avoid conflict of interests.

Also speaking, Belema Taribo, who spoke on behalf of Nigerian Insurance Deposit Corporation (NDIC) faulted the overwhelming powers given to AMCON not be be subjected to CBN and NDIC regulatory powers in section 60(z) of the AMCON Act.

“The AMCON Act is silent on the period within which the Corporation would wind up its operations. The terminal date of AMCON should be clearly stated in the Act following best practices,” he said.

He added, “Section 60(z) of the AMCON states that the AMCON Act is superior to every other law. The NDIC Act 2006, the CBN Act 2010 and the Bank and Other Financial Institutions Act 1991 should be excluded from this provisions of that section because its effect on the above statutes is detrimental to the stability of the banking sector.

“The above statutes establish the regulators and supervisors of the banking system and also govern the operations of banks in the economy. It is therefore a gross anomaly for this provisions of a statute which I intended to act as a temporary resolution mechanism in the banking sector to be superior to the provisions of statutes governing the operations of the same sector.”