AMCON Rakes N151.53bn from GTBank, FBN Holding, Three Other Tier-1 Banks
Asset Management Corporation of Nigeria (AMCON) in 2020 collected a total of N151.53 billion as levy from Guaranty Trust Bank Plc (GTBank), FBN Holdings, and three other Tier-1 financial institutions operating in the country.
The other three banks are Access Bank Plc, United Bank for Africa (UBA) Plc, and Zenith Bank Plc. The amount from the five to the Debt-Buy-Back institution is an increase of nearly 21 per cent over the N125.4billion reported by these banks in 2019.
AMCON is a body established by the Act of the National Assembly of Nigeria in July 2010 with a 10 years lifespan.
The banking sector resolution cost represents the AMCON levy, which is applied to the total balance sheet size of the bank. The current applicable rate in Nigeria based on the AMCON Act of 2015 is 0.5 per cent of total assets (inclusive of off-balance sheet)
Shareholders have criticised the establishment of AMCON, stressing that the Corporation is ripping off shareholders of their Return on Investment (ROI) when a chunk of profit is paid as a levy.
The International Monetary Fund (IMF) had earlier advised the Nigerian authorities to wind down AMCON to curb moral hazard and fiscal risks. Scott Roggers, IMF senior resident representative in Nigeria at that time that the government should begin to wind down the organisation between 2013 and 2017.
This provoked a comment from AMCON which said that it had stopped buying bad loans. “We are not buying any more non-performing loans, Mustapha Chike-Obi, its managing director then said.
The Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie said the Corporation has overstayed its function in the banking sector, urging the banking sector to suspend funding AMCON as it is affecting shareholders profit.
“AMCON is lobbying the federal government to extend its operations. If the Central Bank of Nigeria wanted to sustain AMCON, fine but not banks funding the corporation. AMCON has overstayed its functions in the banking sector
“AMCON is reporting losses despite collecting levy from banks and having challenges in selling recovered assets from debtors.
“The banking institution must stop to continue to fund AMCON because it is not the bankers’ committee that forms their board but the government. If the federal government wanted to keep the board of AMCON, they must think of funding it not collecting from banks.”
An investigation by InsideBusinessNG revealed that many banks operating in the country reported an increase in total assets in 2020, the primary factor that drives the AMCON levy.
For example, FBN Holdings with total assets of N7.69trillion in 2020 from N6.2 trillion in 2019, paid an AMCON levy of N44.82billion in 2020 from N38.58billion in 2019.
Access Bank paid AMCON N35.44 billion as levy in 2020, a 56 percent increase from N22.66 billion reported in 2019, while Zenith bank was charged N30.95 billion by AMCON in 2020 as against N28.65billion reported in 2019.
Access Bank in a presentation to investors stated that “growth in operating cost was largely driven by increased Information Technology and E-business expenses (92 percent) and regulatory costs of which inclusive is AMCON charge (+ 56 percent).
“The increase in IT and E-business expenses is due to investments in IT capability with the focus of improving customer experience and to support digitisation, while the increase in AMCON charge is due to the growth in our asset base.”
UBA last year reported a 37 per cent increase in total assets to N7.7trillion in 2020 from N5.6trillion in 2019 and paid AMCON N23.13billion as levy in 2020 from N19.99biillion reported in 2019.
Last year, GTBank’s AMCON levy was N17.2 billion as against N15.5 billion reported in 2019.
Managing Director, Ahmed Kuru regretted that as of today, the contributors from loans recovered from have not been able to meet the expected yearly amounts, which he said is mainly due to the fact that the assumptions have not materialized.
“Therefore, the only remedy is to provide an an-inbuilt legal mechanism whereby they continue to contribute in addition to recoveries until the whole debt is paid, otherwise the obligation falls on taxpayers, Kuru concluded.
It would be recalled that AMCON purchased 12,743 Non-Performing Loans (NPLs) worth N3.8 trillion from 22 financial institutions for a purchase price of N1.8 trillion.
The purchases are covered by various collaterals. Of this number, AMCON has so far resolved about 4,000 NPLs while more than 8,000 NPLs are still outstanding. AMCON has also mapped out about 6,000 accounts for the Asset Management Partners (AMPs.)
The Corporation had to inject a total sum of N2.2 trillion to 10 Nigerian banks – bridged and owned banks (intervened banks) – bringing Net Book Value (NAV) to Zero.
The Corporation recently took over Skye Bank (now Polaris) under the bridged bank concept of the CBN and NDIC. The Bank which has now stabilised and operating efficiently posted a N28.5 billion profit in the Year 2020
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