The Nation Newspaper

Tag: AMCON

  • AMCON N3.8 trillion Bond matures 2023

    The Asset Management Corporation of Nigeria (AMCON) Notes worth N3.8 trillion will mature in 2023, a report by the Central Bank of Nigeria (CBN) has shown.

    According to the CBN’s Annul Activity Report released yesterday, the AMCON Bond was issued in December 2014 at six per cent interest rate  and have remained outstanding at end-December 2018, same as in 2017.

    The bonds which were taken up solely by the CBN, were issued in a restructuring exercise, and will mature in 2023.

    Meanwhile, AMCON recently  hinted on the corporation’s plan to disengage Asset Management Partners (AMPs) that are not effective in recovering N740 billion debts assigned to them.

    The AMPs are currently handling over 6,000 accounts within AMCON portfolio but outsourced to them.

    The accounts outsourced to AMPs constitute only 20 per cent or N740 billion of the total Eligible Bank Assets (EBA) portfolio of N3.7 trillion.

    AMCON Managing Director, Ahmed Kuru said the corporation places equal importance on the recovery efforts as they count towards the achievement of the corporation’s core mandate.

    He also promised the corporation may assign more accounts to AMPs that have shown aggression and zeal based on the review of the AMP scheme so far.

    Kuru spoke at the 2019 edition of the AMCON/AMPs Interactive/Feedback Session in Abuja.

    AMPs, are consortiums appointed by AMCON after a rigorous selection process with specialist skills required to ensure recovery and debt resolution; banking, legal, valuation and accounting.

     

     

  • Business giants in trouble over N5tr AMCON debts

    Institutions and individuals on Asset Management Corporation of Nigeria’s (AMCON’s) debtors’ list are to be blacklisted. They will no longer be allowed to do business with the government henceforth, it was learnt at the weekend.

    According to a plan by the Federal Government, an inter-agency collaboration framework that comprises Ministries, Departments and Agencies (MDAs) and supervised by the office of the Vice President, will block the indebted entities from dealing with the government, which is the biggest player in the economy.

    Vice President Yemi Osinbajo, who doubles as the Chairman of the National Economic Council (NEC), dropped the hint, when he hosted some members of the AMCON Board at the State House, Abuja.

    The Board was led by its Chairman, Muiz Banire.

    Prof Osinbajo said the debtors made it impossible for the corporation to resolve its outstanding N5 trillion debts, thereby holding the entire nation to ransom with their “bad behaviour”.

    There are 105 debtors on the AMCON list. They include key players in aviation, power, real estate, oil and gas, as well as other sectors of the economy.

    AMCON has recovered over N1 trillion since inception in 2011.

    Of the recovered funds, cash assets account for 60 per cent and non-cash assets, such as properties and equity securities, account for the balance of 40 per cent. Over the same period, AMCON’s repayment of its indebtedness to the CBN was over N1 trillion.

    The vice president plans to invite the AMCON team alongside other MDAs to fine-tune how to ensure that anybody or agency that is a debtor to AMCON faces the wrath of the Federal Government as those who are indebted to the government are direct enemies of both the government and the people.

    He said the Federal Government under the leadership of President Muhammadu Buhari will no longer allow a few individuals who owe AMCON huge sums of money walk freely on the streets. Osinbajo said: “I think the time has come for us (Federal Government) to set some examples with some of these top debtors of AMCON, which I believe will set a good example and serve as deterrent to others.”

    Osinbajo, who expressed satisfaction with the performance of the executive management of AMCON under Ahmed Kuru’s watch, promised that the government would support AMCON.

    He said that the Corporation would be empowered with the tools to go after the obligors who have remained recalcitrant despite the olive branch extended to them over the years by the debt recovery agency.

    Osinbajo said: “I congratulate AMCON for the work done so far having recovered over N1 trillion and counting both in cash and in assets. The work you do as a recovery agency is not something that is particularly easy or encouraging because we all know how Nigeria works. But we are committed to working more closely with your administration to ensure that these monies are recovered from AMCON obligors because it will help our economy and provide the government with more money to continue to improve on the development of infrastructure across the nation.”

    Read also: AMCON takes over Micmerah International

    Banire said AMCON’s visit was to congratulate President Muhammadu Buhari and Vice President on their victory at the polls. He highlighted some of the challenges faced by AMCON as a result of the attitudes of some debtors who behave as if they are above the law.

    Banire said: “As at end of December, 2018, AMCON’s Assets Under Management (AUM) amounted to about N172.5 billion.

    “It is noteworthy to state that out of the total real estate properties, assets available for sale are valued at N62 billion. Of this N62 billion, about 83 per cent comprises bare land and other assets, which may need considerable improvement to convert into income generating assets. Your Excellency may recall that in September 2018, following the takeover of Skye Bank Plc. by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC), AMCON was again invited to inject a total sum of N898.45 billion as capital, thereby leading to the emergence of another bridged bank named Polaris Bank Limited.

    “The intervention in Skye Bank was caused majorly by internal abuse by the operators. As a result of that development, AMCON’s total debt obligation to the CBN is currently in excess of N6 trillion.

    “And it is evident that the Federal Government cannot afford to write off this debt in the short term, hence, our moral obligation to pursue obligors and recover the debts owed. But, despite the successes recorded, the corporation has been facing a number of challenges, which include obligors resorting to all manner of tactics to avoid honouring their obligations.

    “Whilst some are still enjoying government patronage, others are using the judiciary and adopting legal technicalities to stall recovery, which is why we need a new strategy to enable AMCON meet its mandate before sunset.”

    Kuru said he could not wait for the take-off of the inter-agency collaboration promised by Osinbajo as, according to him, such a move would compel all sister agencies to be on the same page in the interest of the country.

    The AMCON boss also reminded the vice president that AMCON’s debts sits on the government’s balance sheet with CBN, and failure to recover them may result in serious consequences including recourse to tax payers’ money, which must be avoided.

    “He said for an organisation like AMCON with sunset date, all hands must be on deck to provide the support required. According to him, considering the huge portfolio of debt, no obligor must be allowed to go scot free –  no matter how highly placed in the society.

  • AMCON takes over Micmerah International

    A Federal High Court sitting in Awka, the Anambra State capital in suits No. FHC/AWK/CS/101/2018 and No. FHC/AWK/CS/102/2018 has ordered the Asset Management Corporation of Nigeria (AMCON) to take over the business and assets of Micmerah International Agency Limited.

    AMCON had appointed Chief Tagbo Anieto as receiver/manager over the assets of Micmerah International Agency Limited, which owe it over N1billion. The company is located at Onitsha, the commercial hub of Anambra State. In compliance with the court order, AMCON earlier yesterday through the Receiver/Manager took over the business and assets of Micmerah International Agency Limited. Justice I.B. Gafai, who presided over the matter granted AMCON the full possession as well as power of sale over the assets of Micmerah International Agency Limited now in the custody of AMCON.

    Read also: AMCON: Beyond the here and now

    AMCON had taken over the Non-Performing Loans (NPLs) of Micmerah International Agency Limited from various banks in line with its mandate under the AMCON Act.

  • AMCON: Beyond the here and now

    It is 10 years since Nigeria was engulfed in a financial crisis of unprecedented proportion. The Asset Management Corporation of Nigeria (AMCON) came in 2010 when the banking sector had undergone, for the first time, massive structural reforms, which involved bank consolidations, recapitalization and managerial changes at some banks, and portfolio clean-ups. These reforms provided a solution to the banking crisis that Nigeria experienced in the years preceding. In the end, the soundness in the banking sector was restored.

    AMCON was established to fulfil the following objectives:Assist eligible financial institutions to efficiently dispose of eligible bank assets; manage efficiently and dispose of eligible bank’s assets acquired by it; and obtain the best achievable financial returns on eligible bank’s assets or other assets acquired by it.

    AMCON’s initial achievements were tremendous.In an unprecedented move, AMCON acquired about 13,774 Non-Performing Loans (NPLs) worth N3.6 trillion from 22 commercial banks. That move saved our banking system, while its provision of financial accommodation of N 2.2billion protected about N 4.7trillion of depositors’ funds and interbank takings as well as saved approximately 14,000 jobs.

    With the settlement of about 56 percent of the total N3.7 trillion (about N2.072 trillion) bad debts, AMCON is certainly not doing badly with recovery efforts, putting into consideration the historical success of other asset management corporations in other climes with even much better working environments.

    This feat is commendable if one looks at the fact that the country went into recession in 2016-2017. During this period Nigeria experienced a very sluggish growth in the economy, which was aggravated by inadequate supply of foreign exchange and accentuated by a falling of the price of oil, the nation’s main foreign exchange earner, accounting for about 75% of its export revenue.

    Conveniently out of the recession, the renewed efforts at non-oil revenue collection are helping to reduce fiscal vulnerability caused by oil price shocks.

    Thanks to the reforms pursued by the Buhari administration to lay a foundation for renewed growth, increased revenues from the non-oil sector are also helping the country.

    The enforcement of the treasury single account (TSA) blocked financial leakages. Renewed efforts also went into enforcement of tax compliance, which increased the ratio of capital to recurrent expenditure to 30:70. Above all, there has been continuous support for agencies saddled with the responsibility of stabilising the financial system such as Assets Management Corporation of Nigeria (AMCON) are fast yielding results.

    AMCON’s impressive performance is no doubt a tribute to the hard work by many players. In the last three and half years, AMCON has hadat the driver’s seat, a risk management expert-Ahmed Lawan Kuru. Since his arrival on the scene, he has further entrenched professionalism in the way and manner AMCON operates. His idea of assets management partners (AMP), from example, is helping AMCON’s recovery efforts, particularly the over six thousand accounts with loan balances of N100 million and below.

    So also is the close cooperation with key financial regulatory institutions and important stakeholders –the Federal Ministry of Finance, Central Bank of Nigeria, Nigerian Deposit Insurance Corporation of Nigeria (NDIC) and Securities and Exchange Commission (SEC).

    Underpinning the success of AMCON has been the adoption of liquidation option to safeguard depositors’ funds and to restore investor confidence. An element of AMCON’s activities consists of supporting businesses with a view to enhancing their productivity. It includes transforming their NPLs to RPLs (re-performing loans). Doing this provides liquidity to the banks, which in turn help them meet their own obligations as well.

    Proof of the efficacy of AMCON as pillar of Nigeria’s financial stability mechanism can easily be found in the relative stability despite occasional hiccups experienced in the financial system since it came on board.

    Overall, I see similarities in the path taken by Nigeria and Europe in managing the financial systems in the post-crises period, including the role of institutions like AMCON.

    Europe implemented three fundamentals policies in the post 2008/9 financial meltdown. Firstly, it implemented massive reforms. Some of the countries that received financial assistance from the European Financial Stability Facility (EFSF)/European Stability Mechanism (ESM), such as Spain and Ireland, have among the highest growth rates in Europe today.Secondly, closer economic policy coordination between the euro area countries now makes it harder to repeat the mistakes that led to the crisis in the first place. Today there are concerted efforts for a Banking Union through the establishment of the Single Supervisory Mechanism, which now oversees the 130 systemically important banks at the European level, and the Single Resolution Board, which was set up to wind down failing banks across Europe.

    I liken the European Stability Mechanism (ESM) to AMCON. This institution serves as a rescue mechanism for euro area countries that have lost market access. Like AMCON, ESM were not there at the beginning of the crisis, but the ESM is today a permanent institution ready to fight the next crisis when it comes.

    The ESM has disbursed a total of €279 billion to programme countries. Funding these programmes has made ESM a key market player. ESM has issued more than 100 benchmark bonds and 130 bills over the last seven years (2010-2017). Like the achievements of Nigeria’s AMCON, these achievements by ESM would have been unthinkable only a few years back, but, as a result, the euro area economy is now back on track and rapidly growing again.

    I recall here one of the famous quotes of the AMCON’s CEO which is “that debt in itself is not always a bad thing. The problem of debt arises when there is default”. So the question is always how do we avoid defaults, and if they eventually happen, how do we manage the crisis that follows?

    There is no one-size-fits-all answer to these questions. Every nation studies its economic peculiarities and adopts the best approach that will mitigate the potential for a catastrophe. AMCON is Nigeria’s stabilisation mechanism of choice and it is the serving the nation.Europe sees the ESM as a permanent institution moving forward ready to fight the crisis of the future. Why shouldn’t Nigeria take a similar, long-range view and allow AMCON to remain for many years to come?

    At its establishment, it was designed to last for just 10 years. With the benefit of hindsight, and considering the effective stabilizing role it is playing in our economy, our next National Assembly will do well to amend and extend the term of AMCON for it to continue with its good work, which is in tandem with the global best practices.

     

    • Hassan, a financial analyst, wrote from Abuja.

  • AMCON seeks Failed Bank Act’s return

    The rise in bad loans has pushed the Asset Management Corporation of Nigeria (AMCON) to seek return of the Failed bank Act.

    AMCON Managing Director/CEO, Ahmed Kuru yesterday in Lagos, called on the authorities to revisit the Failed Bank Act to ensure that bank officials account for their actions.

    He said the reintroduction of the Failed Bank Act into the country’s financial system will not only curtail the current trend of financial rascality on the part of some bankers, but would bring discipline to the banking industry in general.

    He urged banks to strengthen their risk management framework to stem the rise in bad loans.

    Kuru spoke when he hosted officials of Risk Management Association of Nigeria (RIMAN) at AMCON Lagos office.

    RIMAN led by its President, Magnus Nnoka, the Chief Risk Officer, and his team were at the meeting.  Kuru explained that given the huge resources that are available to financial institutions and the pivotal role they play to the development of the economy makes it mandatory for financial institutions to take the issues of risk management seriously to prevent what happened during the global financial crisis.

    He suggested that in line with the fight against corruption, there was also need to fight against impaired and arranged credits so that operators are held responsible for booking credits contrary to their credit policy, that go bad under their supervision.

    Reiterating that one of the reason for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON was because of the prevalence of weak risk management framework by financial institutions, Kuru said that the trend became a baggage, which contained all sorts of bad omen for the economy including poor corporate governance structure, lack of robust risk management strategy and lack of adherence to laid down principles that govern credit approvals by financial institutions.

  • AMCON may disengage non-performing AMPs – Kuru

    The Managing Director/CEO, Asset Management Corporation of Nigeria (AMCON), Mr. Ahmed Lawan Kuru, has stated that AMCON may disengage Asset Management Partners (AMPs) that cannot cope with the speed and enormous challenges of debt recovery expected by the corporation.

    Kuru who made this known in a statement promised that the corporation may assign more accounts to AMPs that have shown aggression and zeal based on the review of the AMP scheme so far.

    According to the statement, “The AMPs are currently handling over 6,000 accounts within AMCON portfolio.”

    AMCON, he insisted, places equal importance on the recovery efforts as they count towards the achievement of the corporation’s core mandate.

     

  • AMCON MD Kuru honoured

    The Sir Ahmadu Bello Youth Council of Nigeria (ABYCN) has presented Asset Management Corporation of Nigeria (AMCON) Managing Director/Chief Executive Officer (CEO),   Ahmed Lawan Kuru with the prestigious Sir Ahmadu Bello Gamji Award of Excellence 2019.

    Sagir Adam, who led a seven-man ABYCN executives to AMCON’s Abuja office said, the AMCON CEO was chosen for the honour because he represented the “Epitome of humanitarian service and exemplary leadership” in the society.

    Group Head, Corporate Services, Mrs. Iyatum Adode-Kobiti, and  AMCON’s Head, Corporate Communications, Mr. Jude Nwauzor, Sagir, who received the award on Kuru’s behalf said Kuru deserved to be celebrated because ABYCN took a rigorous, but holistic appraisal of his exceptional track record of performances before deciding to bestow him with the honour.

    According to Sagir, ABYCN considered various aspects of Kuru’s professional and social make up, including his leadership qualities; his dedication to duty without fear or favour at AMCON; his passion to entrench good corporate governance at key institutions in the country;  attention to details; involvement in the promotion of youth welfare and his commitment to the growth of the economy and humanity in general among others, and found him a thorough-bred individual.

    He said: “When his name appeared before the ABYCN, we have a number of things we consider before we arrive at our decision to honour any personality. I stand here today to let you know that when we ran our checks and evaluations on the personality of Mr. Kuru, his achievements and track record spoke for itself. We found him worthy of emulation and qualified for the ABYCN honour.”

    Aside what he described as the wonderful, but challenging work Kuru had done since assuming office as AMCON boss, the ABYCN admires his benevolent, selfless service and contribution to humanity, societal transformation and educational development, among other enviable characteristics.

    He said ABYCN was particularly impressed because Kuru has constantly, fearlessly and judiciously remained focused on debt recovery from some high-profile recalcitrant debtors of the Corporation, who hitherto were difficult to tame.

     

     

  • AMCON and VIP debtors

    •Everything possible must be done to make them pay up

    News that the Federal Government is to blacklist the Asset Management Company of Nigeria’s (AMCON) debtors over their five trillion Naira debt comes as a very disturbing one, given the country’s already volatile economic situation.

    AMCON was set up in 2010 by an Act of the National Assembly, with an expected 10-year lifespan, to act as the buyer of banks for the Nigerian government, by acquiring the Non-Performing Loans (NPL) and injecting N736bn to buy off their assets. Unfortunately, of the banks in question, three: Mainstream, Keystone and Enterprise banks were unable to meet up and subsequently  acquired by AMCON and literarily baptised ‘bridge banks’.

    Curiously, in 2013, the International Monetary Fund (IMF) reportedly cautioned the Federal Government to stop the operations of AMCON to avoid future financial challenges. As a first precautionary step, AMCON’s founding managing director (MD) was relieved of his job, on allegations of the opaque nature of the sales of the acquired banks.

    Today, with the statement from the current MD, Ahmed Lawan  Kuru, decrying the loss in value of the N5 trillion assets acquired banks, which might have gone down to a paltry N1 trillion, it seems the chicken has come home to roost. His expression of optimism at the inauguration of the Muiz Banire -led board by the finance minister, Zainab Shamsuna Ahmed, for a more viable operation, seems neither here nor there.

    The call to blacklist AMCON’s debtors doing big business with government is as worrisome as it is economically draining. We have followed the trajectory of the AMCON/VIP debtors with utter amazement, especially their penchant to flagrantly exploit judicial loopholes to get all sorts of injunctions against the corporation.

    AMCON’s lawyers have had to fruitlessly battle the legal hurdles of dealing with the substantive issues in question. It does appear that the VIP debtors are bent on exploiting all legal technicalities to either buy time or totally renege on the terms of agreement. We call on the courts to be very circumspect when such VIP debtors run to the judiciary to barricade the hand of economic justice getting to them.

    The Credit Bureau and all such ancillary agencies must be strengthened to make it impossible for big time debtors to run from bank to bank or institution to institution to obtain loans or assets and leave the government using extra resources to get them to meet up to their financial obligations.

    AMCON’s travail is however not an isolated case. In a country with weak institutions and ‘powerful’ individuals, things don’t really work as they should. The problem is that we fail to realise that there is a chain reaction from every singular failed or failing sector.

    The moment the institutions of governments are run like those in developed countries, all forms of fraud and other abuse of legal processes by the politically and economically strong would not be eradicated, but they will be reduced to the bare minimum. It is sad that the country in its more than 58 years of independence does not really have strong institutions.

    The plethora of panels, committees and agencies cannot on their own guarantee a functional system; there must be a deliberate shift in policies that would ensure true equality before the law in ways that no type of power shields anyone from the long arms of the law.  Treating certain individuals as sacred cows because they wield economic or political power is the shortest route to a dysfunctional system.

    AMCON’s management and the new panel that has been set up must take the road less travelled by being patriotic enough to go after the debtors with all the legal assistance at their disposal.

    The symbol of justice must come to bear in this debtor crisis. The law must be blind to class and status so that those who have debts to pay must be treated the right way debtors of such magnitude ought to be treated. A country develops when the rule of law is supreme and each individual held to the same standards to ensure the system is not shortchanged or held to ransom by a few individuals, not only as it concerns AMCON but all sectors of the country’s economy.

  • Fed Govt to seize payments to AMCON debtors

    The Federal Government has vowed not to write off the debts of obligors to the Asset Management Corporation of Nigeria (AMCON) but will seize payments due to them and have nothing to do with them going forward.

    Speaking at the inauguration of the AMCON board in Abuja at the weekend, Minister of Finance Mrs. Zainab Ahmed said: “It must be emphasised that government would not deal with debtors that have failed to honour their obligations with AMCON. Payments due to some of these obligors will be put under lien until they enter into a resolution agreement with AMCON.”

    The reason for this decision, she said, “is because AMCON’s debts sit on the government’s balance sheet with Central Bank of Nigeria (CBN).’’

    So far, the minister lamented that, “AMCON’s repayment of its indebtedness to the CBN was over N1trillion. AMCON’s total debt obligation to the CBN, is in excess of N5 trillion. It is evident that the Federal Government cannot afford to write off this debt in the short term, hence, our moral obligation to pursue obligors and recover the debts owed.”

    She said she had “been briefed on some of the challenges facing the Corporation, which includes obligors resorting to all manners of tactics to avoid honouring their obligations. Whilst some are still enjoying government patronage, others are using the judiciary and adopting legal technicalities to stall recovery’’.

    The finance minister noted that AMCON has been able to recover over N1trillion since inception to end of last year. Out of the recovered sum, cash accounted for 60 per cent while non-cash assets such as properties and equity securities accounted for the balance of 40 per cent.

    She said: “The Corporation has acquired over 12,000 non-performing loans worth approximately N3.7 trillion from 22 commercial banks; injected N22 trillion as Financial Accommodation to 10 banks. The direct impact of that action is seen in the protection of about N3.66 trillion of depositors’ funds and approximately 14,000 jobs were saved.”

    AMCON said it has two major roles:  one is to bail out banks through purchase of non-performing loans; and the second, to recover the loans from the obligors.

    “It has successfully bailed out the banks, it is now at a stage where it must recover the debts. Failure to recover may result to serious consequences, including recourse to tax payers’ money which must be avoided.

    “For an organisation with sunset date, all hands must be on deck to provide the support required. Considering the huge portfolio of debt, no obligor must be allowed to go scot free no matter how highly placed,” she said

    In his address at the inauguration,  AMCON Managing Director, Mohammed Kuru told the finance minister that “the most difficult thing is debt collection’’.

  • AMCON seeks buyers for Polaris Bank

    The Asset Management Corporation of Nigeria (AMCON)  is  seeking new investors to take over nationalised lender, Polaris Bank after elections next month. It is also taking stock of the bank’s assets ahead of the sale, its spokesman, Jude Nwauzor, said yesterday.

    “The election season has slowed down things,” Nwauzor, said.

    Nigerians will vote on February 16 in a presidential election where incumbent Muhammadu Buhari is seeking a second term.

    “We would advertise for Expressions of Interest from investors after elections and commence the sale process,” Nwauzor said.

    Some of Nigeria’s banks have faced tough times since low oil prices put pressure on their business of lending to the oil and gas industry. The country emerged from a recession in 2017 but economic growth remains sluggish and this has weighed on credit growth.

    Read also: AMCON’s debt recovery challenges

    Polaris Bank was set up last year to take over the assets of Skye Bank which collapsed and had its operating licence revoked by Nigeria’s central bank.

    Polaris was then transferred to the state-owned bad bank for sale to investors. AMCON has previously sold three other nationalised banks.

    The AMCON spokesman said the bad bank was seeking to recover debts owed to Polaris that were non-performing and had asked for proposals on repayment.

    AMCON was set up in 2010 to take on non-performing loans from banks as part of the country’s efforts to resolve a financial crisis at that time.