By Stanley Opara

Friday, 18 Feb 2011

The Asset Management Corporation of Nigeria will not give additional money to the rescued Deposit Money Banks aside from the five per cent of the original value of unsecured loans it pays to them, the Managing Director, AMCON, Mr. Mustapha Chike-Obi, has said.

He said AMCON had taken the stand given the uncertainties involved in the process of recovery of the loans and the need for the corporation to sustain its operations under the prevailing financial situation.

AMCON had said that margin loans would be purchased at a 60 per cent premium of their average 60-day prices as at November 15, 2010, while unsecured loans would be purchased at five per cent of their original value, and not the book value, which might have increased because of default interest charges.

Chike-Obi spoke at the 1st Annual Debt Collection Conference organised by the Chartered Institute of Bankers of Nigeria in conjunction with Rightmove Consulting Limited in Lagos on Thursday.

He said henceforth, no DMB would be allowed to have more than five per cent of non-performing loans in its books, adding that at any point the NPLs exceeded five per cent, the excess would be sold to AMCON.

The AMCON boss admitted that the corporation had a lot of job on its hands especially in its debt recovery moves with over 10,000 borrowers on board, and called for the support of other stakeholders in the country’s financial system.

Commenting on the powers of AMCON in recovering non-performing loans, he said, “We have considerable enforcement powers on loans that are not performing or that had been said to be non- performing.

“Our intention is to recover the money back, but with some considerations. AMCON will, however, deal with these debtors in a constructive manner. By the Act that created the corporation, AMCON can declare any debtor insolvent.”

Chike-Obi noted that agents, who were into debt recovery for the various DMBs, should continue with the relationship until AMCON terminated the contracts.

He said AMCON, by the provision of the law, could take over assets of debtors, which would only be recovered by their owners after three years. He added that the corporation would work together with the Nigerian court system.

“AMCON will try its best to work with the courts, and will make applications to the courts when necessary,” he added.

The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, who delivered the keynote address at the conference, however said the efforts made so far by the CBN in sanitising the system as well as the operations of AMCON, had helped to stem the liquidity challenges faced by some banks.

Sanusi, who was represented by the Branch Controller, CBN, Lagos, Chief Adekunle Ogunsanya, said, “Our banks are now well positioned to meet the expectations of both internal and external customers as well as prospective investors.

“Henceforth, bank managers must be guided by professionalism, corporate governance and good conduct in their day to day activities so that our banks can remain safe, sound and competitive in the global market.”

He said, given the criticality of efficiency to cost of funds, the CBN had recently started a shared services project in collaboration with banks aimed at centralising bank offices and the industrialisation of common processes.

He added, “In the next three years, we will reduce overheads costs in the banking industry by 30 per cent. We are also working towards establishing Independent Power Projects for independent power supply for banks operating in Lagos area as a pilot cluster.”

Source: Punch