By Agency Reporter

The Asset Management Corporation of Nigeria has recovered N10bn debt owed Deposit Money Banks since its inception in November 2010, its Executive Director, Mr. Adegboyega Benson, has said.

Benson made this known at the Capital Market Solicitors Association Members’ Forum in Lagos on Tuesday.

He said that the non-performing loans were recovered to give the banks new lease of life.

Benson, who delivered a paper on “The AMCON Bond Issuance: An Opportunity to Deepen the Nigerian Capital Market,” said that AMCON was making progress trying to resolve non-performing loans.

“We have achieved quite a bit in trying to ensure that we deliver on what we have promised,” he said.

Benson stated that the major functions of AMCON included acquiring and resolving non-performing loans, restructuring the loans and foreclosing the loans that could not be restructured.

He said that AMCON’s actions would not lead to inflation because the corporation was not directly involved in cash transactions.

He said, “We do not deal with cash but issue bonds to banks. What this means is that we only replace non-performing assets on bank’s books.

“It is merely a form of swapping, which benefits the banks because they can release and redeem the bonds for cash for onward lending whenever they deem fit.”

Benson said AMCON bonds would also not negatively affect the Federal Government’s debt profile because they would offer layers of support in the long run.

“Eventually, there will be interest repayment to the government and where this is not viable, the assets of these rescued banks will be sold,” Benson said.

NAN reports that the forum was hosted by the law firm of Jackson, Etti & Edu, a member of the Capital Market Solicitors Association, which was inaugurated in 2001.

The Managing Partner of the firm, Mr Koye Edu, said that the “power of initiative” was important to the development of the economy.

“Initiative is a strong tool in making a difference. A group of people came together and thought up AMCON and look at what it has achieved today,” he added.

The Managing Director, AMCON, Mr. Mustafa Chike-Obi, had said, “Non-performing loans, backed by shares of listed companies, are valued at an implied premium of approximately 60 per cent on the 60-day average of recent prices, ending November 15, 2010.

For loans backed by other assets, not shares, we are taking the market valuation from the banks, subject to a review by AMCON within 12 months. For loans with no security or those with ineligible securities, we are paying five per cent of the principal value. We are buying the assets and we are giving them bonds in exchange.”

He added, “We are in the first stage now, which is the acquisition stage. That should be over by the second quarter of next year. But as we acquire loans, we will start the restructuring phase. That will probably go on till the end of the third quarter of next year. By the end of the third quarter, the loans that we cannot restructure will result in us getting some assets.”

“When we get those assets, we are going to manage them for a while. There is work to be done, but in different stages.”

Source: Punch