The Chairman of House of Representatives Committee on Banking and Currency, Hon. Jones Chukwudi Onyereri, has said that the House of Representatives will not fold its arms and watch the plot by some Deposit Money Banks (DMBs) lure the Asset Management Company of Nigeria (AMCON) into additional debt aside its present N4.6trillion debt obligations.
The lawmaker stated that the orchestrated deceptive plot to mislead AMCON to buy additional toxic asset from Eligible Financial Institutions (EFIs) due to its high level non-performing loan will be resisted by the House, adding that AMCON was already close to its regulatory threshold.
Hon. Onyereri disclosed this in Enugu at the opening of a retreat for lawmakers, declared open by the Enugu State governor, His Excellency, Lawrence Ifeanyi Ugwuanyi.
Barring his mind on the high level overtures extended to AMCON, Hon. onyeriri said, “We are also aware that some economists are clamouring for AMCON to buy more toxic assets from the Eligible Financial Institutions (EFIs) in view of the very high level of the non-performing loans that are worse than the 2009 experience and far above the regulatory threshold. We wish to sound a note of warning that this Committee will not; I repeat will not support any such move, at least not at a time like this in the history of our economy.”
Earlier in his address, the Managing Director/Chief Executive Officer of AMCON, Mr. Ahmed Kuru told the lawmakers that the Corporation’s recent assessment of obligors as at December 31, 2016 identified 350 accounts with a current exposure of N2.5 trillion that represent about 80 per cent of AMCON’s total obligor debt.
“AMCON has also repositioned its debt recovery approach to strengthen legal and credit restructuring units to collaborate on the aforementioned 350 accounts termed “defaulters”; enhance the restructuring and turnaround team; and engage in asset tracing to enhance recovery. In spite of the difficulties,” Kuru said, adding that “AMCON continues to persevere in the face of adversity.”
Kuru lamented the failure by AMCON to recover debt owed to the Central Bank of Nigeria (CBN), saying that in the last two years, AMCON debt repayment to the CBN were N456.4 billion and N517.7 billion but actual payments were N256.7 billion and N191.1 billion in 2015 and 2016, respectively.
In his words, “This translates to a funding shortfall of N199.7 billion and N326.4 billion in 2015 and 2016, respectively. Of this shortfall, repayment due from AMCON in 2015 and 2016 represented 42 per cent and 53 per cent while the resolution cost fund represented 58 per cent and 47 per cent in 2015 and 2016, respectively. The funding plan envisaged contribution of 70 per cent from the resolution cost fund and 30 per cent from recovery.
“To put this into perspective, AMCON’s total debt obligation of N4.6 trillion represents 75 per cent of the 2016 national budget, 26 per cent of the 2016 total national debt, and 5 per cent of the country’s nominal gross domestic product in 2016. Given the current demands on the Federal Government, it is doubtful that it can afford to expense AMCON’s debt in the short term,” Kuru stated.
Kuru solicited the support of the legislature to ensure that AMCON obligors do not continue to exploit the weak provisions of the law to hold government and the economy to ransom.
“I find it troubling that while some of these obligors frustrate AMCON recovery efforts by exploiting the court system, they continue to do business with the Federal Government and get paid.
“These issues contribute a lot in hampering the efforts of the Corporation and must be nipped in the bud through proactive legislative instruments. We have to find ways to ensure better cooperation from the EFIs to enable AMCON effectively recover these loans.
“Where they are not willing to cooperate with AMCON, then AMCON must and should enforce its right of Clawback on the EFIs. It is important to remember and note that public funds were used to buy these loans that helped prevent the EFIs from going under and as a matter of public urgency AMCON needs to recover these monies.
“Likewise, there is need to sensitise the courts on the need for speedy resolution of AMCON cases that are before it. The court processes need to be streamlined and obligors prevented from using technicalities in circumventing the process,” Kuru emphasised.
The DG expressed his views on the Nigerian Assets Management Agency (NAMA) proposed bill saying, “we note that this Committee is reviewing the proposed bill of the Nigerian Assets Management Agency (NAMA) and request that the Committee also considers its impact on AMCON. Our position is that AMCON should not qualify as an agency as covered under the proposed NAMA bill since AMCON’s assets were principally acquired from the banking sector for the purpose of debt resolution.”
Hon. Onyeriri while commending AMCON for creditably discharging its constitutional responsibilities, expressed worry over legal obstacles that bar it from optimal performance, which he said was the reason the House in 2015 amended parts of the AMCON Act to further strengthen the institution – which included the establishment of the resolution sinking fund.
The Committee chairman identified lack of co-operation from EFIs; issues relating to Clawback on EFIs and intervened banks; wrong interpretation of the AMCON Act: disingenuous acts of the obligors, who exploit court processes and the short comings in the extant statute to frustrate the efforts of the Corporation in recovering the loans from obligors as some of the challenges against the effective operations of AMCON.