By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE0-The Asset Management Corporation of Nigeria (AMCON) has said that it bought 14,000 non-performing loans, which it borrowed money to buy; and currently struggling to pay back and has so far recovered N740 billion.
Ahmed Kuru, managing director/CEO of AMCON made this disclosure at a media parley in Lagos on Friday. AMCON was established on the 19th July 2010, when the President of the Federal Republic of Nigeria signed the AMCON Act into Law.
AMCON was created to be a key stabilizing and re-vitalizing tool aimed at reviving the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy.
Kuru said that quite a lot of obligors are not saying the truth, don’t have the ability and not willing to payback their debts.
“One basic information that is required is the address because when you are going to recover money, the first thing is: what is the person’s address? We bought 14,000 loans, and when you talk about 14,000 businesses and individuals, it is not a small number.
According to Kuru, the bulk of the information being used by the corporation were made available by the financial institutions from which the debts were bought.
He disclosed that 350 businesses accounts for 85 percent of the loans out of the 14,000 businesses.
“What our initial analysis has shown is that there are about 350 businesses that account for almost 85 percent of the exposure. And those 350 substantially are identifiable, only that some of the businesses have changed locations.”
He disclosed that the tedious nature of the job was the reason the corporation initially introduced the Asset Management Partners programme. “In AMCON, we are less than 400 workers. So, it is not possible for 400 people to pursue 14,000 businesses; so we have given out more 7,000 of those accounts to the asset management partners,” he said.
“I strongly believe that it is not practically possible for us to trace the 14,000 obligors but what is important for us is to be able to track the major ones that represent more than 80 percent of our obligations so that we don’t waste too much time on the lower ones but outsource them and the asset management partners can trace them. So, if we can focus on the 350 and we can achieve 40 percent recovery, that would take us above the global standard for asset management corporation,”” the CEO of AMCON added.
According to him, the N740 billion recovered thus far is at 2017 end and has reduced its loss to N16.41 billion in the review period compared to N164.94 billion reported in the previous year.
Also, he disclosed that recovered funds stands between 35 percent to 37 percent and lamented legal bottlenecks in the effort of the corporation in trying to carryout its mandate, “the corporation is making efforts to pick specific High Court and Judges of integrity to help expedite its cases,” he said.
He said that AMCON is currently working with the National Assembly to improve on the provision of the AMCON Act, “the National Assembly has been very supportive,” the AMCON CEO added.
Kuru said that AMCON is currently in possession of a lot real estate and some other forms of assets. “We have disposed some financial assets, which also included three banks. We are in the process of divesting our interest in Peugeot Automobile Nigeria (PAN).
“This is in addition to quite a number of small businesses that we had intervened and disposed.”
A review of AMCON’s financial statement for the 2017 year end shows that its gross earnings increased 22.6 percent to N342 billion from N279 billion declared the previous year.
Also, total assets decreased to N822 billion in 2017 from N1.131 trillion in 2016. AMCON’s interest revenue increased by 21 percent to N42.56 billion, while its net trading gain climbed up to N22.86 billion.
As the corporation’s 2017 report stands, inflow from the banking sector resolution cost trust fund formed part of the bulk in gross revenue at 62 percent, while the revenue from the aviation sector dipped by 51 percent as a result of crippling activities in the sector in 2017.
“As we all know, AMCON was not set up to make profit. We are not a profit-making organisation. Basically, we are a resolution agency,” Kuru affirmed.