AMCON collects N577.8b from CBN, banks to settle obligations

The Asset Management Corporation of Nigeria (AMCON) received a whopping N577.84 billion from 15 commercial banks and the Central Bank of Nigeria (CBN) to settle its outstanding obligations on issued securities.

In a CBN report for the first half of last year, the apex bank said the collections into the Banking Sector Resolution Cost Fund (BSRCF) in the review period amounted to N577.84 billion.

It said the funds were contributed by the CBN and 15 banks.

 “AMCON utilised the funds to settle its obligations on issued securities,” the financial sector regulator said in its financial stability report posted on its website.

It said AMCON’s total cash recoveries during the review period increased by 27.87 per cent to N66.12 billion from N51.71 billion at end-December 2024.

 “Furthermore, investment income from treasury operations rose by 2.08 per cent to N15.22 billion from N14.91 billion over the preceding half,” it said.

CBN further disclosed that cumulatively, the total recoveries rose by 4.42 per cent to N2.42 trillion from N2.32 trillion during the preceding period, made up of cash N984.52 billion, other collections (property sale, share sales, rental income, dividend income, sale of bridge banks and re-investment income) N1,291.95 billion and asset forfeiture of N149.90 billion.

The apex bank added that the stronger recovery performance contributed to a reduction in AMCON’s liabilities, even as cumulative recoveries climbed to N2.43 trillion, reflecting sustained efforts to strengthen the Corporation’s balance sheet.

It was the rising Non-Performing Loans (NPLs), and the need to save the financial sector from imminent collapse that prompted the Federal Government to set up the Asset Management Corporation of Nigeria (AMCON) in 2010.

AMCON is an institution created for the purchase and resolution of NPLs from the banks. It is also an instrument created by the Federal Government by which the government bolsters ailing banks through the injection of capital in consideration for equity.

AMCON’s creation or intervention was in response to the global economic crisis of 2008/2009; coupled with poor corporate governance practice in the Nigerian banking sector at the time, which had a severe adverse effect on the banking system.

Prior to the establishment of AMCON in 2010, the banking sector was assailed by a myriad of problems, the greatest of which were an all-time high NPLs ratio of more than 40 per cent at that time, poor corporate governance practices, poor risk management, low liquidity as well as insufficient capital adequacy ratio just to mention a few.

Before the global financial crisis of 2008-2009, there was no special insolvency regime for managing bank distress, and banks either failed or were bailed out with no hybrid scheme of restructuring their assets, which AMCON intervention provided.

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Accordingly, the utilization of AMCON to manage the toxic assets on banks’ balance sheets was one of the tools available under the post-financial crisis resolution framework.

AMCON Managing Director/CEO, Gbenga Alade, disclosed that the corporation at inception bought bad loans worth N5.4 trillion from banks and moved quickly to recover the loans.

He said that with inevitable sunset date and recalcitrant debtors, a high premium is placed on debt recovery efforts to ensure that the Corporation achieves its statutory mandate.

Alade until the enactment of the Companies and Allied Matters Act 2020 (CAMA 2020), the Nigerian corporate insolvency law lagged behind the bank resolution regime.

He said that systemic bank distress can be likened to an epidemic in the health sector.

 “It requires special rules to deal with it based on a robust structure of an insolvency regime of regulation or business rescue, liquidation, priorities, secure creditors’ rights and limitations, and transnational cooperation amongst others. Just like in the health sector, the   financial system will return to normal after overcoming the financial epidemic,” he said at one of his meetings with judges.