Banks Defer Credit, Await AMCON



By Emele Onu, 09.21.2010 


Some of the nation’s banks have withheld approval to new private sector credit pending the resolution of issues around their non- performing risk assets with the Asset Management Corporation of Nigeria (AMCON). While some are said to have slowed down the processing of new loans, others, especially the rescued banks have put on hold their credit activities.


THISDAY investigations revealed that most of the banks have sent to the Central Bank of Nigeria (CBN) the list of the bad loans they intend to sell to AMCON and have received the regulator’s approval, following the verification. “We expect to regain our lending capability after the bad loans would have been bought by AMCON and it is quite a significant sum. It will put us in a good position to jump-start our credit operations and we hope to start relating with our loyal customers for that purpose almost immediately,” a general manager with one of the rescued banks said pleading anonymity.


Industry operators put the amount of toxic assets waiting to be bought by the AMCON at between N1.6 trillion to 2 .4 trillion, with many of the operators expressing disappointment that the purchase will not begin this year. Operators fear that except the AMCON takes off, the expectation of igniting private sector credit remains a mirage. The non –performing loans as a percentage of gross loans of the 24 banks is put at 35 per cent.Private sector credit grew for the first time this year last June, recording a 0.89 per cent growth to N10.1trillion. In July, credit to the sector declined by 1.9 per cent to N9.91trillion.


The AMCON bill was signed into law on July 19 this year after months of delay, to curtail the crisis of toxic assets in the banking sector. The calculation early this year was that by the third quarter of this year the AMCON would have bought the non-performing loans of the banks and cleaned their books.


The Federal Government appointed the Board of the AMCON recently, which is chaired by Mr Aliyu Belgore, while  the Managing Director is Mr Mustapha Chike Obi.With AMCON kicking off early next year, analysts said there will be increased confidence of potential buyers in the rescued banks and that following their recapitalisation, there will be enhanced access to finance by borrowers.




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