AMCON shrinks seven banks’ profits by N95.68bn amid concern to scrap agency

SEVEN commercial banks paid a total of N95.68 billion in the first quarter (Q1) of this year as a levy to the Asset Management Corporation of Nigeria (AMCON) amid concern over the continued existence of the agency, The ICIR can report.

This was reported in the unaudited financial statements of Access Holdings, FCMB Group, Guaranty Trust Holding, Stanbic IBTC Holdings, Union Bank of Nigeria, Wema Bank and Zenith Bank for the period ended March 31, 2023.

The cumulative figure represents the 0.5 per cent AMCON charges on banks’ preceding year’s total assets and contingent exposures.

Established under the AMCON Act 2010 and started operations on July 11, 2011, AMCON was premised on a 10-year mandate to save the Nigerian banking industry from imminent collapse by efficiently resolving their non-performing loans (NPL), following the 2007–2008 financial crisis.

Following the expiration of 10 years, concerns have been mounting over the legality of the continued existence of the corporation.

“AMCON was set up as a special purpose vehicle (SPV) with a time frame to resolve the bad loans crisis of Nigerian banks which arose from the impact of the global meltdown in 2008. The timeframe set for the existence of AMCON has since passed, yet the SPV has not been wound up. It has now become a permanent crisis resolution mechanism,” David Adonri, the executive vice chairman of Highcap Securities Limited, shared his thoughts with The ICIR.

Adonri noted that from the onset, it was agreed banks would contribute a certain percentage of their income to a sinking fund created by AMCON to offset the liabilities attendant to the mopping up of the bad loans.

“As long as AMCON remains in existence, banks will continue to contribute to the sinking fund.

“The status of AMCON now in respect of the implementation of its assignment is not known. If AMCON can be more transparent in disclosing its state of affairs, it will be seen whether there is any compelling reason for its continued existence,” he said.

According to the national chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, the government of the day seems unconcerned about the continued operations of AMCON.

AMCON gulps N95.68bn from seven banks in Q1 2023

“We have been calling on the so-called AMCON to wind up its operations, but it has fallen on deaf ears. Nobody is listening,” he told The ICIR.

Shareholders are concerned as the AMCON levy lowers shareholders’ funds meant to take up investments.

He questioned, “How much have the governments committed to AMCON to fund its operations since its creation? All the money they have been milking from the same banks and companies they confiscated their access to, have they been accounted for once? Has AMCON ever published its accounts since inception? If it has, where is it? Have they been into profits or losses?”

Okezie stressed that the banks AMCON came to rescue had been the one funding its operations.

“This is sad for the country as AMCON has ended up putting some banks in a mess through the AMCON levy, which runs into trillions of naira.

“But at the same time, there is nothing to show for all these huge amounts of money. In fact, AMCON has outlived its usefulness. It is high time it called it quits to allow banks to live healthy financially as its continuous existence will further kill the banks to the point of no return,” he said.






     

     

    However, findings by The ICIR showed the total profit before tax (PBT) for the seven banks rose to N308.57 billion in Q1 from N223.19 billion in the corresponding period of 2022, while the AMCON levy, an operating expense on the banks’ financial books, lowered their profitability by 22.54 per cent from N95.68 billion, from N78.08 billion in Q1 2022.

    The managing director and chief executive of AMCON, Ahmed Kuru, had said banks’ contributions to the sinking fund in recent years had been low and not enough to pay out its debt.

    If the bank’s debt owed to the CBN was not fully repaid before the sunset date of 2023, banks would continue to pay into the fund, which would then be with the CBN, Kuru said.

    He noted that the funding arrangement of the corporation was that commercial banks provide 70 per cent, while AMCON would take care of 30 per cent.

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