AMCON levy stops when N5.6tr debt is paid, says Chike-Obi

By IAfrica
In Nigeria
Jun 11th, 2014
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•N800b for repayment by August

Collection of the 0.5 per cent Banking Sector Resolution Cost Fund (Sinking Fund) from banks’ total assets, will end when N5.6 trillion debt incurred in the resolution of banking crisis is fully settled, Managing Director, Asset Management Corporation of Nigeria (AMCON), Mustafa Chike-obi, has said.

Chike-Obi who made this known yesterday at a media parley in Lagos, said the Corporation paid N1 trillion of the debt last year, with another N800 billion scheduled for payment by August.

He explained that by the end of this year, the Central Bank of Nigeria (CBN), which holds N3.6 trillion of the AMCON bonds, would be the only creditor to AMCON.

Chike-Obi said the Sinking Fund collection is expected to end before the expiration of AMCON’s 10-year operational mandate.

He said the levy collection has not in any way impacted on banks’ profitability as claimed by some shareholder groups, explaining that the AMCON fee is one of the nicest things that happened to the banking sector.

“I challenge any bank that was doing better before AMCON, to come up and tell me that it is making less profit because of AMCON’s levy,” he said.

The sinking fund that was created by the AMCON Act of 2010, mandated banks to contribute 0.5 per cent of their total assets to it on yearly basis. The initial contribution was 0.3 per cent, but it was raised to 0.5 per cent in August last year.

He said that although the levy is tasking on the banks,  they have to pay because it is based on the agreement establishing AMCON. He said tye earlier the bonds are repaid, the sooner it would take  AMCON to wind down.

He said the ongoing amendment of the AMCON Act, that is now over 90 per cent completed, will incorporate payment of  the AMCON levy remittances.

He said AMCON has brought stability to the financial services sector, adding that such a role should not be trivilised.

He said the sale of Enterprise Bank Limited and Mainstreet Bank Limited will be concluded by September, adding that Keystone Bank’s sale will commence afterwards.

“AMCON does not see the possibility of buying new non-performing loans till it winds up by 2022, as the banks are now stronger,” Chike-Obi said.

AMCON was set up in 2010 to buy bad debts from banks and save the industry from collapse, as lenders reeled in bad loans brought about by stocks’ speculators and price fluctuations experienced by fuel importers.

The agency spent N5.6 trillion in 2011 to acquire non-performing loans and took over three of the eight banks it rescued with about N620 billion.

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