The Nation Newspaper

Tag: Asset Management Corporation of Nigeria

  • 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 boss urges investment in human capital

    From the Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON) Ahmed Lawan Kuru has a charged to government and institutions at all levels to pay more attention to human capital development, which he described as the key to the paradigm shift the country is clamoring for.

    Kuru who was special guest of honour at the 2018 edition of the annual Presidential Dinner for the graduating Senior Executive Course 40 Participants of the National Institute for Policy and Strategic Studies, organised by the Alumni Association of the National Institute (AANI), said no country in the world has been able to attain change without a strategy that supports consistent investment in the development of its human capital.

    He said, “It is not easy to have a paradigm shift in two, three or even eight years the way most of us are demanding for change in this country. Institutions and governments at all levels must ensure consistent and sustained investment in the development of human capital, which in turn will gradually change the narratives of development in our dear country. I believe the National Institute for Policy and Strategic Studies is strategically positioned to achieve this because of the caliber of people that are privileged to attend the course.

    “To achieve that however, we must invest in research especially in the area of education. So if we must have a country of our dream, we must invest and develop our human capital but above all, we have to critically study those policy decisions that brought us where we are today as a nation and strive to correct wherever we may have made mistakes. However, we cannot achieve any of these if we are not patriotic citizens.”

    The AMCON boss argued that his interaction with the cream of the Nigerian public sector including the military, police, banking, labour and other strategic institutions, has revealed that, members of the National Institute, have occupied enviable positions of heads of state, governors, senators, ministers, captain of industries and head of traditional institutions amongst others meant that they have the powers to make the desired changes in the country.

    Adding, “This role no doubt signifies how important the society views each and every one of you. It is therefore incumbent on you to demonstrate high sense of leadership and responsibility that is devoid of any form of parochialism and sentiment. The fast pace of change and national development in countries across the world, especially in past decades, has been driven by a paradigm shift towards thinking globally and acting locally. Successful national growth and development have therefore been accomplished under inherently deft, visionary and people oriented national policies and strategies.

    “As you are well aware, the National Institute was conceived as a high-level institute with the primary objectives of serving as the nation’s foremost policy think-tank, developing top-class technocrats of high intellectual capacity like you who are expected to conceptualise and lead the implementation of dynamic policy initiatives and strategies for national development. This narrative therefore put a heavy burden on you to sustain the momentum by impacting positively towards a better society,” Kuru concluded

  • Lecture on corporate governance

    Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON), Mr. Ahmed Lawan Kuru, will on October 9, address stakeholders as guest speaker at the yearly aviation colloquium.

    The forum is organised by the  NigeriaTravelsMart (NTM) magazine to seek ways of improving professionalism in the sector.

    The theme of this year’s edition is “Corporate Governance and Airline Industry Development in Nigeria.”

    Kuru, who has been consistent in calling for the strengthening of good corporate governance across various institutions (private and public) was selected as guest speaker because of his outstanding commitment to this call over the years.

    The AMCON boss, the organisers added, will share the experiences of AMCON’s intervention in the transport and allied sectors, with particular interest in Aero and Arik airlines.

    Kuru will also answer questions from participants, aviation practitioners and the media during the event.

  • N1b debt: AMCON takes over Sigma Apartments

    The Asset Management Corporation of Nigeria (AMCON) has secured a Federal High Court Abuja Division to take over Sigma Apartments owned by Sigma Engineering & Construction Limited over N1 billion debt.

    The order given by Hon. Justice B.F.M. Nyako  said the Sigma Apartment is promoted by Saidu Samaila Balarabe Sambawa, a former Minister of Sports and Social Development of the Federal Republic of Nigeria. The order came on the application of AMCON after the corporation exhausted all avenues of peaceful resolution with the obligor regarding the huge debt, but was left with no other choice.

    According to AMCON, information on the website Sigma Apartments described the apartment as an epitome of refined living featuring 48 fully furnished service luxury apartments designed for those accustomed to the finer things in life. The apartment is conveniently located in the heart of Abuja metropolis midway between the northern and southern retail hub of the vibrant Abuja, downtown of Wuse ll. The site further describes it as a hospitality brand that provides extended stay accommodation for sojourners in Abuja.

    The promoter of Sigma Apartments and his directors have had running battles with AMCON over their inability to settle the huge debt of over N1 billion. But despite the overtures and genuine efforts made by AMCON to reach an amicable settlement terms, the businessman and his co-promoters have remained recalcitrant, thus pushing AMCON to seek legal solution to the issue.

    Read Also: AMCON’s N4.8trn debts must be recovered – Senate

     Accordingly the Corporation appointed Babatunde Alabi as the Receiver Manager to take immediate possession of the expansive property situate at Plot No.1376, Cadastral Zone, A07, Wuse 11, Federal Capital Territory (FCT), Abuja.

    In compliance with the court order, and with the support of the Inspector General of Police, and his deputies as well as the court Bailiffs, AMCON through its Receiver, Babatunde Alabi took possession of the assets of Sigma Apartments, its right and in compliance with lawful authority.

    AMCON under its Managing Director/Chief Executive Officer, Ahmed Kuru has maintained that there will be no sacred cows in its bid to recover the huge debts obligation of N4.8 trillion in the hands of a few Nigerians.

    To deal with the situation however, AMCON has in recent times increased the tempo of its recovery activities using firmer resolution strategies as well as utilizing the special enforcement powers vested by the AMCON Act to compel some of its recalcitrant debtors especially those that are politically exposed and business heavyweights to repay their debts.

  • AMCON seizes Oduah’s assets

    Asset Management Corporation of Nigeria (AMCON) at the weekend secured a court injunction from Justice M.S. Hassan of the Federal High Court Lagos Division against Sea Petroleum Oil & Gas Limited, whose chief promoter is former Minister of Aviation, Senator Princess Stella Oduah-Ogiemwonyi.

    The former minister who is currently a serving member of the 8th Senate of the Federal Republic of Nigeria has been having a running battle with AMCON over her inability to settle her huge debt of nearly N20billion. AMCON purchased the Eligible Bank Assets (EBAs) of Sea Petroleum & Gas Limited from Union Bank Plc sometime in 2012.

    However despite the overtures and genuine efforts made by AMCON to reach an amicable settlement, the Senator and her co-promoters have remained recalcitrant.

    Following the inability of both parties to peacefully resolve the humongous debt, AMCON sought the assistance of the court. The order also affects Princess Stella Oduah’s other business interests for which AMCON has since appointed Moyosore Jubril Onigbanjo, SAN as Receiver over the assets of Princess Stella Oduah-Ogiemwonyi; Sea Petroleum Oil & Gas Limited; Sea Petroleum and Gas FZE as well as Star Tourism and Hotels Limited.

    The court also ordered the freezing of the funds of Sea Petroleum & Gas Limited and its affiliated companies and principal promoters held anywhere by any entity or persons in Nigeria; authorised AMCON and its Receiver, Moyosore Jubril Onigbanjo, SAN to take over all assets pledged as collateral for the facility by Sea Petroleum Oil & Gas Limited.

    Justice Hassan specifically ordered Sea Petroleum Oil & Gas Limited and its affiliated companies to hand over the company’s business, which sits on over 9000 square kilometres of land in the fastest developing area of Lagos State along the Lekki-Epe Express Way; two Tank Farms of 500 metric tonnes capacity; a property at Maiyegun Tourism Zone, Lekki Peninsula Scheme 11, Lagos Island and a filling station complex at kilometre 14, Lekki Epe Expressway, Ikota, Lagos State.

    The court order also listed a host of other assets across the country including Plot 2, block 12C, Babafemi Osapa Crescent Lekki, Lagos State; Block 5, house 4A Mobolaji Johnson Estate, Lekki, Lagos State; Office/filling station at Jakande, Lekki, Lagos State; Office complex 1,2 and 3 km 14, Lekki-epe Expressway , Ikota, Lagos State; Filing station Complex at km 14, Lekki Epe Expressway, Ikota Lagos State; Staff residential Quarters, Ikota Lagos State; E25-E36, Gat Oboh Drive, Millennium Estate, Oniru, Lagos State and F3-F5, SPG Road, Millennium Estate, Oniru, Lagos State. The rest include, SPG Agungi 2 Lekki Lagos State; Office/Filling station complex at Funmilayo Ransome Kuti, FCT, Abuja; Gas plant at Karu, FCT, Abuja; Filing station Complex, Lugbe, FCT Abuja and Agriculture Farm at Kuje, FCT Abuja.

    In compliance with the order of the court, AMCON through its Receiver, Moyosore Jubril Onigbanjo, SAN, at the weekend simultaneously took possession of the assets of Sea Petroleum & Gas Limited and its affiliated companies.

     

     

  • AMCON boss urges Nigerians to buy made-in-Nigeria

    As part of efforts to sustain the success by PAN Nigeria Limited in the outgoing year, the Managing Director/Chief Executive Officer of Asset Management Corporation of Nigeria (AMCON), Mr. Ahmed Kuru has called on PAN to maintain the tempo of the achievement in 2018; just as he implored Nigerians both individuals and corporate to patronise Peugeot brand of cars.

    The AMCON boss made the remarks at the 2018 Dealers Convention organised by the automobile company in Kaduna recently.

    He was represented at the event by Mr. Ben Daminabo, Head of Subsidiaries at AMCOM. According to Kuru, PAN achieved a lot of mileage in 2017 against all economic odds, which he stated required commendations from all stakeholders, which is why AMCON and indeed all stakeholders want them to sustain and even improve upon in the new financial year.

    It would be recalled that PAN Nigeria Limited is one of the mega institutions that received the intervention of AMCON, which prevented the automobile company from going under.

    He added, “This is the best time for PAN Nigeria Limited to restrategise and move ahead like all other automobile manufactures across the globe. It is our wish that Peugeot will reclaim its pride of place in Nigeria by producing those vehicles that made the brand very popular in those days. We believe the brand has all it takes to dominate the marketplace because the new generations of Peugeot cars are fuel efficient, durable; rugged and built for Nigerian roads. Aside from these attributes, Peugeot creates thousands of jobs for our teaming population, which is why we all need to support the brand because it is our own.”

    According to him, the fact that PAN is still in business is another demonstration of the positive impact and contribution of AMCON towards stabilise the Nigerian economy, which is one of its core mandates.

    Earlier in his speech, Managing Director of PAN Nigeria Limited, assemblers of Peugeot brand of vehicles in Nigeria, Mr. Ibrahim Boyi had disclosed that the company made huge progress in 2017 despite the economic downturn in the country. Boyi stated that the company revenue grew by 65 per cent from N3 billion to N5.3 billion.

    He added, “PAN has made giant stride in 2017 against the heavy and high tidal wave of economic recession, declining value of the naira, access to forex and erosion of infrastructure in the environment.” Stretching his position further, the PAN boss said, “PAN’s market share was 8 per cent down from 12 per cent in 2016, revenue grew by 65 per cent (to N5.3 billion from N3 billion) and operating profit by 78 per cent (to N719 million from N405 million).”

    Also speaking at the event, the General Manager, Sales and Marketing of PAN, Mr. Omagbitse Bawo added that their focus in 2018 would be customer centric.

     

  • Ethiopian Airlines plans to take over Arik

    Ethiopian Airlines plans to take over Arik

    The Management of Ethiopian Airlines has submitted a formal proposal to take charge of troubled carrier Arik Air, which accounts for more than half of air passenger in Nigeria, according to official statistics.

    Speaking to the media, Esayas WoldeMariam, Ethiopian Airlines’ managing director of international services, said the airline has outlined its terms and conditions to the Nigerian government and waiting for its response on the matter.

    “We are capable and desirous of handling the airline,” WoldeMariam noted without specifying details of the offer.

    The Ethiopian Airline chief said he expects competition for Arik from international airlines.

    Arik is operated by Asset Management Corporation of Nigeria (AMCON) since government’s bailout in February.

    The bailout was forced by a prolonged crisis occasioned by cancelled services, unpaid staff salaries and mounting debt.

    Arik’s Managing Director, Capt. Roy Ilegbodu, said in August the company had stabilized under AMCON’s leadership, with “services running smoothly and salaries paid.”

  • ‘Arik not owing N300b’

    ‘Arik not owing N300b’

    The Association of Concerned Aviation Practitioners (ACAP) has said a claim by Asset Management Corporation of Nigeria (AMCON) that Arik Air has a debt profile of N300billion was untrue.

    In a statement signed by its secretary, Justin Nwokolo, ACAP said the embattled airline’s total debt, including what it owed AMCON, was less than N150billion.

    It warned of a plan by a cabal, which it promised to name in its next statement, to hijack the airline. 

    AMCON, which took over Arik last Thursday, declared on Sunday that it needed over N10billion to fix the airline. 

    But Nwokolo noted that the N10b request was made even before an audit of the airline has been carried out and that the figure was too high. 

    He said: “Within 24 hours of the hostile takeover, AMCON is saying that it needs N10billion to fix the airline.” 

    He alleged that the Arik takeover was reminiscent of AMCON’s takeover of Aero Contractors in 2012, which, according to him, left Aero in even worse debt. 

    He said: “ACAP wishes to remind the public that this same AMCON took over Aero in 2012 claiming that the airline was owing N12billion. At the time, the airline had nine aircraft and was worth far more than the alleged debt.
    “After taking over Aero, AMCON has used an additional N20billion to chase a purported N12billion debt, leaving the airline in N32billion debt hole!” 

    AMCONNwokolo said the cabal’s actions would endanger Arik’s safety record. 

    He continued: “Why are they lying that Arik Air owes N300billion when the total debt owed by airline to all vendors, including AMCON, is less than N150billion, which is less than 10 percent of the value of the airline valued at $4billion by the world renowned Delloite of London? 

    “As concerned aviation practitioners, it is our patriotic duty to ensure that this cabal that has chopped our past will not also chop our future by endangering Arik Air’s sterling record in aviation safety for the past ten years! 

    “And who says they cannot? After the hostile takeover, International Air Transport Association (IATA) has suspended Arik Air’s membership.
    “Do not be deceived. There are 28 aircraft in Arik Air’s fleet at the time when AMCON took over. Apart from the two A330 on C-Check, the two A340 on lease, two executive jets and two classics, 20 of its aircraft are flying.”
    Nwokolo also stated that the the story about Arik being on the verge of an imminent shutdown before it was taken over by the government was “a lie from the pit of hell, and even NCAA, the government regulator, can attest to this.”

  • AERO contractors suspends scheduled services

    AERO contractors suspends scheduled services

    Aero Contractors Airline on Wednesday announced that it would suspend its scheduled services from Thursday September 1, 2016.

    This is contained in a statement from the management of the airline in which it stated that the development was part of the strategic business realignment to reposition the airline and return it to the part of profitability.

    This business decision, which is a result of the current economic situation in the country, has forced some other airlines to suspend operation or out rightly pull out of Nigeria.

    In the case of Aero, the airline said the airline had faced grave challenges in the past six months which impacted its business and by extension the scheduled services operations.

    According to the management, these factors are both internal and external environmental factors that have made it difficult for the foremost airline to continue its scheduled services.

    It said during the period in review, Aero, which was hitherto revered for its safety, timeliness among other virtues witnessed epileptic operations and services to the external public that are caused by non-alignment of fundamental issue of the business, which in some cases have been frustrating and embarrassing to all parties including staff, customers and indeed all stakeholders.

    As part of its resolve to ensure the airline survived unlike most other carriers that experienced short life span in the country, the Asset Management Corporation of Nigeria (AMCON) had appointed Mr. Adeniyi Adegbomire SAN as Receiver Manager in February 6, 2016, with the aim of turning the airline around.

    Since AMCON’s intervention in Aero Contractors in 2011, it has provided support for the airline to meet working capital requirements and fleet expansion.

    These were to ensure the airline remains a going concern providing services to various clients and the general public.

    Unfortunately, the operating environment within and outside the airline have hindered any possible progress especially in the last six months when the Naira depreciated against the dollar thus making it impossible for the airline to achieve its operational targets.

    With these realities coupled with protracted engagements with all relevant stakeholders, the Management of Aero has strenuously reviewed and assessed options and opportunities on ensuring viability, safety and sustainability of operations during the period with a lot of sacrifices.

    “The impact of the external environment has been very harsh on our operational performance, hence management decision to suspend scheduled services operations indefinitely effective September 1, 2016 pending when the external opportunities and a robust sustainable and viable plan is in place for Aero Contractors to recommence its scheduled services.

    “The implication of the suspension of scheduled services operations extends to all staffs directly and indirectly involved in providing services as they are effectively to proceed on indefinite leave of absence during the period of non-services,” the statement stated.

    It added that “We are aware of the impact this will have on our staff and our highly esteemed customers, hence we have initiated moves to ensure that we are able to return back to operations within the shortest possible time, offering reliable, safe and secure operations, which the airline is known for.”