By Yemi Kolapo

Friday, 18 Feb 2011

Indications emerged on Thursday that some bank debtors, whose non-performing loans allegedly contributed to the crisis in the banking sector, might have dragged their banks and the Asset Management Corporation of Nigeria to court over the new status of their debts. 

The debtors, who account for a significant part of the non-performing loans of some of the big rescued banks, insist that AMCON has no right to take over their debts, according to sources close to the loan deals. 

A top official of one of the affected banks, who pleaded anonymity because of the delicate nature of the matter, said many bank debtors had realised that there would no longer be a hiding place under the new regime, and were, therefore, taking measures to delay AMCON’s restructuring process. 

“Some of them have taken the bank to court, joining AMCON as second respondent and challenging the provision, which gives the bank the right to transfer their debts to AMCON,” he said. 

The debtors, our correspondent learnt, were insisting that they were indebted only to the banks and not to AMCON. 

The Managing Director, AMCON, Mr. Mustafa Chike-Obi, who spoke in an exclusive interview with our correspondent in Lagos on Thursday, confirmed the development, but refused to mention specific names of debtors. 

He said, “I don’t know how many debtors your sources have given you. But I’m aware that two debtors have filed notices in courts, saying that their banks don’t have the right to sell their debts to AMCON. But its a non-issue.

“Without prejudice to legal proceedings, what they are saying in essence is, perhaps, that the AMCON Act does not exist. Rescued banks have no choice but to sell their non-performing loans to AMCON on the directive of the Central Bank of Nigeria.”

Chike-Obi said that the corporation had met with debtors with pressing issues, noting that it would meet with stockbrokers on Monday.

AMCON, at the moment, has 10,000 bank debtors to deal with.

The AMCON MD also disclosed that, though the corporation had the responsibility to recapitalise the banks to zero level, it would not end up with majority shares in any of the rescued banks, “given the deals that are being negotiated.”

The managing director noted that if the banks had been allowed to be liquidated by the Nigeria Deposit Insurance Corporation, the shareholders would have been left with nothing, adding, however, that with AMCON, they would get “something back.”

He, however, said that AMCON did not address non-performing loans of less than N25m in the first phase of loan purchase, saying that it would address lower loans in the next phase, which is expected to begin soon.

AMCON had purchased about N2.2tn non-performing loans at about N1tn in the first phase of its assignment. 

The corporation had said that it did not float the N1.5tn bonds as earlier scheduled because it was seeking some waivers from the Ministry of Finance and the Debt Management Office.

It had acquired N1.036tn non-performing loans of 21 banks at its completion board meeting in December.

Chike-Obi had said then, “I have two hard deadlines: I have to buy all the non-performing loans of all the banks by the end of the first quarter of 2011. We also have to recapitalise all the rescued banks by the end of the second quarter.”

While explaining the corporation’s debt recovery process, he had noted, “After the acquisition stage, we then need to sit down with the debtors, in what I call the restructuring mood. We will sit down with each one of them, understand their situation and try and get to a point that is helpful to them, but also responsible to the taxpayers. Inevitably, there will be some assets that we will acquire, and we will have to manage these assets in such a manner that will minimise the cost of resolution.” 

 

Source: Punch