Access Holdings, Four Others Tier-1 Banks Incur N243.96bn In AMCON Fees In 2023
Access Holdings Plc and four publicly listed Tier-1 banks in Nigeria incurred N243.96 billion in banking sector resolution costs to the Asset Management Corporation of Nigeria (AMCON) in the 2023 financial year.
The levy for the year is a 28 per cent increase from N191.09 billion in the 2022 financial year according to data from the audited/unaudited reports of the banks by InsideBusinessNG.
The other Tier-1 banks are Zenith Bank Plc, FBN Holdings Plc, Guaranty Trust Holding Company Plc (GTCO), and United Bank for Africa Plc (UBA).
AMCON, a subsidiary of the Central Bank of Nigeria (CBN), was established in 2010 to stabilise the Nigerian banking system by efficiently resolving the non-performing loan assets of the banks in the economy.
Currently, it is being funded by a combination of loan recoveries, contributions from the CBN, sales of pledged assets, and a sinking fund assessed to the banks.
The banking sector resolution cost represents the Corporation levy, which applies to the total balance sheet size of the bank which pays the levy. The current applicable rate based on the AMCON Act of 2015 is 0.5 per cent of total assets plus total balance sheet assets.
The five banks’ total assets hit N94.3 trillion in 2023, a growth of 70.9 per cent from N55.17 trillion in the 2022 financial year.
The breakdown of the data as compiled by InsideBusiness showed that Access Holdings incurred the highest amount of N68.81 billion in 2023, an increase of 30.5 per cent from N52.73 billion in 2022, while GTCO recorded the least with N27.3 billion AMCON levy in 2023, representing 17.3 per cent increase from N23.3 billion in 2022.
Access Holdings’s AMCON levy 30.5 per cent growth is on the backdrop of the significant increase in the asset value of the newly restructured bank, which grew on the back of multiple mergers and acquisitions.
As of December 2023, Access Holdings recorded a total asset value of N26.69 trillion, which is nearly 78 per cent higher than the N14.99 trillion recorded in the same period of the prior year. At almost N27 trillion, Access Holdings is the largest financial institution in the country based on total assets.
GTCO attributed the increase in operating expenses resulted from growth in regulatory costs- Deposit Insurance Premium (NDIC) and AMCON expenses and the impact of depreciation of functional currencies across all jurisdictions wherein it operates.
Zenith Bank declared N57.38 billion AMCON levy in 2023, a 30.4 per cent increase from N44.01 billion in 2022, as FBN Holdings in its unaudited result and accounts announced a N50.1 billion AMCON levy in 2023, about 26 per cent increase from N39.76 billion in 2022.
GTCO in a presentation to investors and analysts explained that regulatory charges including, AMCON levy and Deposit Insurance Premium increased in the year. AMCON levy increased by 17.3 per cent to N27.4billon from N23.3billion due to growth in the underlying total asset and contingents base at the bank’s level to N5.46trillion in 2022 from N4.66trillion in 2021 (AMCON levy is computed as 0.5 per cent on the preceding year’s total asset and contingents base),”
In addition, UBA’s AMCON levy closed 2023 at N40.36 billion in 2023, representing an increase of nearly 29 per cent from N31.3 billion reported in 2022.
The federal government established AMCON with a 10-year mandate in response to the mounting bad loans and the requirement to prevent the banking sector’s impending collapse. The AMCON Act 2019 (Amended) gives the corporation broader authority to pursue obligors for unpaid debts.
Additionally, helping eligible financial institutions efficiently dispose of eligible bank assets in compliance with the Act’s rules is one of the key objectives of the Act.
Initially, banks were required to pay 0.3 per cent of all assets into the sinking fund. In 2013 it was raised to 0.5 per cent of total assets (and 0.3 per cent of contingent liabilities).