Chike Obi Kicks AMCON, NDIC Over N247.88bn Levies On Four Tier-1 Banks
The charges by both the National Deposit Insurance Corporation (NDIC) and the Asset Management Corporation of Nigeria (AMCON) have drawn a total of N247.88 billion from four Tier-1 banks in 2022 and cut down on returns to their equities’ holders.
Data obtained from the financial statements of the four banks show that they expended the sum of N159.78 billion as AMCON levy while the total sum of N88.1 billion was expensed on Deposit Insurance Premium during the period under review.
Against this backdrop, the former Managing Director of AMCON, Mustafa Chike Obi, has expressed serious concern, saying the huge payment need to be addressed urgently to reduce the burden on the operational cost of banks in Nigeria.
Speaking as a guest on Arise TV business programme, “Global Business Report,” Chike Obi who is currently the Chairman of the Bank Directors Association of Nigeria (BDAN) stated that “The NDIC charges an insurance premium on bank deposits. In contrast, AMCON charges banks a proportion of total assets remitted to a sinking fund to pay off AMCON intervention payments for acquiring toxic bank loans. The twin charges place an additional operating burden on bank account maintenance costs.”
InsideBusinessNG’s review of the charges and levies paid by four Tier 1 banks showed that First Bank paid N39.76 billion as AMCON levy, and the sum of N29.44 billion as Deposit Insurance Premium in the financial year ended December 31, 2022. The lender had paid N55.23 billion as AMCON levy and N3.18 billion as Deposit Insurance Premium in the corresponding period of 2021.
In its audited financial statement for the year 2022, Access Bank disclosed that the Group paid N52.734 billion AMCON levy for 2022 while the sum of N22.530 billion was paid as Deposit Insurance Premium. In 2021, the Group had paid N41.509 billion as AMCON levy while the sum of N20.444 billion as a Deposit Insurance Premium.
For Zenith Bank, the AMCON levy was reported to have increased from N37.920 billion in 2021 by the Group to N44.010 billion in 2022. The Group paid a Deposit Insurance Premium of N21.747 billion in 2022 up from N17.273 billion in 2021.
GTBank reported an AMCON levy of N23.288 billion for the year 2022, up from N21.888 billion in 2021 while Deposit Insurance Premium stood at N14.395 billion up from N12.239 billion in 2021.
Chike Obi, an economist of note, believes that while AMCON is still in existence the NDIC should not charge an insurance premium on bank deposits. He added if it does, it should be remitted to AMCON until its tenure elapses.
“There must be a discussion on the AMCON and NDIC charges with a pathway to resolving the lingering issues around it. The most important issue is a plan that agrees on a cap on the amount chargeable to banks,” the former AMCON boss stated.
He pointed out that the two charges are the second-highest operating costs of banks in the country, and added that the position of BDAN on the charges has been communicated in writing to AMCON, NDIC, and the CBN.
AMCON was created in 2010 by the Federal Government through the central bank to take over the non-performing loans in the banking sector to rescue sick lenders after the 2008 financial market crisis and attendant huge non-performing loans that threatened to crash more lenders in Nigeria.
As a way to fund the AMCON, the apex bank imposed a 0.5 per cent levy on the annual profits of commercial banks, and the bad loan bank is said to have received N453.47bn as levies from commercial banks between 2020 and the first quarter of 2022.
Recently, the Independent Shareholders Association of Nigeria (ISAN) kicked against the continued payment of the levy, saying that the AMCON levies were hurting the returns on investments of the commercial banks in the country.
Speaking for the members of ISAN, the Coordinator Emeritus of the association, Sunny Nwosu, said the corporation received N146.9 billion in 2020, N180.67 billion in 2021, and N125.9 billion in the first quarter of 2022 as levies from commercial banks, noting that these were deductions from the imposition of 0.5 percent charges on banks’ total assets on and off-balance sheet imposed on banks.
ISAN decried the sustained depressed returns on investments of minority shareholders of banks on the backdrop of huge costs to banks. They argued that the corporation has demonstrated its inability to successfully resolve toxic debts after 12 years of operations adding that the agency recovered only a paltry N1.4 trillion since inception.
At the commencement of its operations, the agency purchased 12,743 NPLs or eligible bank assets (EBAs) valued at N3.8 trillion from 22 eligible financial institutions (EFIs) for N1.8 trillion and added that the corporation earned about N327.6 billion from 0.5 per cent charges on banks’ total assets on and off-balance sheet items imposed on nine banks between 2020 and 2021.
Comments are closed.