By Stanley Opara

The Asset Management Corporation of Nigeria is now set to purchase non-performing loans of banks ranging from N20m to N50m, its Managing Director, Mr. Mustapha Chike-Obi, has said.

Chike-Obi told our correspondent in a telephone interview on Monday that the corporation would, in the next phase, also purchase NPLs of healthy banks, including Equitorial Trust Bank, “which did not make the last phase.” He added that the corporation would send letters to the banks in “a day or two.”

He said, “In the first phase, we addressed non-performing loans of N50m and above. But in this next phase, we will address loans of between N20m and N50m. “We will purchase non-performing loans of healthy banks, including Equitorial Trust Bank, which did not make the last phase.”

Reuters, however, quoted him as saying that AMCON planned to issue another N500bn in bonds to complete the process.

AMCON was set up last year to absorb bad bank loans in exchange for government bonds in order to rebuild lenders’ balance sheets after a N600bn ($4bn) bail-out in 2009.

AMCON issued three-year zero-coupon bonds with a face value of N1.03tn to 21 Deposit Money Banks in December in exchange for non-performing loans. It paid out a discounted total of N770bn in the first round of the purchases.

According to Chike-Obi, AMCON is on track to recapitalise the nine banks rescued in the 2009 bail-out by the end of June, as planned.

“I have two hard deadlines; the end of the first quarter for taking out all the NPLs, and the end of the second quarter for recapitalising the banks,” he said.

He said that AMCON had received all necessary regulatory approvals to issue fully tradeable bonds by the end of March.

The bonds it has issued so far have been consideration bonds pending approvals and will now be converted to listed debts.

The corporation had said that it would not give additional money to the rescued banks aside from the five per cent of the original value of the unsecured loans it paid to them.

AMCON said it took the stand given the uncertainties involved in the process of recovering the loans and the need for the corporation to sustain its operations under the prevailing financial situation.

The corporation 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 the original value, and not the book value, which might have increased because of default interest charges.

However, some bank debtors, whose non-performing loans allegedly contributed to the crisis in the banking sector, had reportedly dragged their banks and AMCON to court over the new status of their debts.

Sources close to the loan deals had said the debtors, who accounted for a significant part of the non-performing loans of some of the big rescued banks, insisted that AMCON had no right to take over their debts.

The debtors were insisting that they were indebted only to the banks and not to AMCON.

Chike-Obi, who then confirmed the development, told our correspondent, “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 it’s a non-issue.”

Source: Punch