By Agency Reporter

Friday, 5 Nov 2010

The General Manager/Chief Finance Officer, Guaranty Trust Bank Plc, Mr. Demola Odeyemi, has expressed reservation on how the Asset Management Corporation of Nigeria intends to value the assets of distressed banks.

Odeyemi, who was speaking at the first Young Lawyers Forum of the Nigerian Bar Association’s Section on Business Law on Thursday in Lagos, said that the Act setting up the corporation was silent on this.

He said that because the Act was silent on this aspect, litigation might arise from an attempt by AMCON to interpret the value of the assets.

“The Act is silent as to how the debts will be valued and what price AMCON will be willing to pay. This is a big lacuna, which should be dealt with,’’ he said.

Odeyemi suggested that the government should take a cue from Northern Ireland where the basis for evaluation was accompanied with the passing of the Act.

He noted that the banks would not be willing participants in transferring their viable assets to the corporation because they would want to handle the assets themselves.

“AMCON is looking for assets that are crystallised and have no legal issues and most capitalised banks will not be willing to sell their assets since they can handle their own portfolio,’’ he said.

Odeyemi, who said he spoke in his personal capacity, criticised the Act for requiring banks to contribute 0.3 per cent of their balance sheet to AMCON.

“It is not fair for the Central Bank of Nigeria to require the capitalised banks to contribute part of their capital to the distressed banks. This is particularly unfair to the shareholders of the banks,’’ he said.

The News Agency of Nigeria reports that Odeyemi spoke on, “Asset Management Corporation: Practicality or Impossibility.”

Source: Punch