AMCON Recovers N1.2trn From Recalcitrant Bank Debtors, Sells Seized Assets For N500bn

The Asset Management Corporation of Nigeria said it made a total recovery of above N1.2trn from recalcitrant bank debtors.

The Corporation also said it sold assets worth about N500bn and resolved close to 5,000 Eligible Bank Assets.

The Managing Director/Chief Executive Officer of AMCON, Ahmed Kuru gave the figure while speaking on the corporation’s focus in his new five-year term.

Kuru also said the Corporation repaid N2trn out of its N4.7trn commitment to the Central Bank of Nigeria.

He noted that the corporation has achieved its first mandate of purchasing the Non-Performing Loans and providing liquidity to the commercial banks.

He said, “We are focused on the second and most difficult phase of recovery and restructuring of the bad loans.

“Recall that AMCON acquired over 12,000 NPLs worth N3.7trn from 22 banks and injected N2.2trn as financial accommodation to 10 banks to prevent systemic failure.

“As a result of this intervention, our current liability with CBN is around N4.7trn while the N2trn had been repaid so far.”

He said before AMCON was established, the economy was in a dire straits.

Kuru stated that there were foreign portfolio withdrawals of credit lines and investment from Nigeria; the stock market also collapsed leading to loss of about 80 per cent of its value and the banking industry crisis deepened due to poor risk management that led to increase in the Non-Performing Loans of the banks as a percentage of industry loans.

He said, “At a point in 2009 NPLs as percentage of all bank loans was as high as about 37.25 per cent. I salute the courage and the wisdom of the Central Bank of Nigeria for quickly intervening by proposing to the National Assembly the need to set up an Asset Management Corporation to stabilise the economy, which was the global trend at that time.”

Kuru explained that the fundamental objectives for the establishment of AMCON was to rescue commercial banks and some underlying strategic businesses in Nigeria from the brink of collapse in the aftermath of the global financial crises of 2008 through acquisition of non-performing loans and to dispose of the underlying assets in the most profitable manner.

“AMCON also had the mandate to recapitalise the banks and to recover the debts using the various resolutions mechanisms created under the Act, which I can tell you have been executed effectively,” he said.

Also, in an attempt to focus its resources on the recovery mandate, he said the Corporation has identified about 6,000 loans with outstanding balances below N100m, which constitute only 20 per cent of its current portfolio.

He noted that this portfolio has been outsourced to debt recovery agents under the Asset Management Partners scheme, which has created huge employment opportunity for others.

Kuru highlighted the fact that the AMP scheme has enabled the Corporation to focus on fewer accounts, which make up 80 per cent of the portfolio.

“In our reckoning, if AMCON is able to resolve the nearly 2,000 accounts it would have achieved more than 80 per cent of its recovery mandate.

“In line with our sunset period, we are tinkering with the idea of increasing the threshold of the AMP scheme to N1bn. We have also classified 350 accounts with current exposure of over N3.2 trillion into a category referred to as Criticized Assets,” he said.

Kuru said the resolution of these accounts are considered to be vital to the success of AMCON’s recovery mandate.

He added, “We give special attention to these accounts at top management level and develop strategies for resolving them.

“The largest concentration is in the energy sector, which constitutes 27 per cent. As we have always stated, one of the major challenges to AMCON’s recovery mandate is the slow pace of our judicial processes.”

He said the Corporation would continue to engage with the judiciary on the role of AMCON and its debt recovery mandate.

ENDS