Shareholders Express Dissatisfaction as Banks’ AMCON, NDIC Expenses Hit N490.54bn

Kayode Tokede

 Shareholders of 10 leading Deposit Money Banks (DMBs) in the country have decried the massive increase in operating cost fuelled by the Asset Management Corporation of Nigeria (AMCON) and Nigeria Deposit Insurance Corporation (NDIC) levies, which reached a whooping N490.54 billion in 2023.

The 10 DMBs are: Zenith Bank Plc, Access Holdings Plc, FBN Holdings Plc, Guaranty Trust Holding Company Plc (GTCO), and United Bank for Africa Plc (UBA).

Others include: Stanbic IBTC Holdings Plc, Wema Bank Plc, FCMB Group Plc, Sterling and Fidelity Bank Plc. 

The N490.54 billion banking sector resolution costs and deposit insurance premium in 2023 the financial year, represent 26 per cent increase over the N386.84 billion reported in 2022 financial year.

 Analysis of the audited/unaudited reports of the banks showed that while AMCON banking sector resolution costs stood at N316.53 billion in 2023, representing about 25 per cent increase over N252 billion in 2022, NDIC deposit insurance premium moved from N134.5 billion in 2022 to N174.01 billion in 2023, a growth of 29 per cent.

A combination of expenses, which include marketing and advertising, fuel, repairs and maintenance and directors’ emoluments, constituted source of expenditure for the DMBs in the period under consideration.

While maintaining a stable financial system, the NDIC charges banks deposit premiums (based on a differential rate system amounting typically to between 0.3 and 0.5 per cent of insurable deposits. Simultaneously, the banks contribute to the AMCON to the tune of 0.5 per cent of bank Assets.

However, the banks’ shareholders over the years have expressed dissatisfaction with the creation of AMCON, stressing that the charges discourage investing in bank stocks with dwindling dividend pay out as a result.

Speaking on behalf of Nigerian shareholders, the Chairman, Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie explained that the corporation has over stayed its function in the banking sector, calling on its banks management to suspend funding AMCON as it is affecting shareholders’ profit.

According to him, “AMCON is lobbying the federal government to extend its operations. If the Central Bank of Nigeria wanted to sustain AMCON, fine but not banks funding the corporation. AMCON has overstayed its functions in the banking sector. AMCON is reporting losses despite collecting levy from banks and having challenges in selling recovered assets from debtors.

“The banking institution must continue to fund AMCON because it is not the bankers’ committee that form their board but the government. If the federal government wanted to keep the board of AMCON, they must think of funding it not collecting from banks.

“What was AMCON doing when some banks were having challenges recently? AMCON has not helped our banking sector and it has not posted any profit. I still do not understand why the Senate requested AMCON to continue to exist. AMCON’s 10 years has ended, according to the law but they continued to stay, playing games with shareholders’ funds. AMCON is killing the industry and not helping the banks when they are in financial crisis.”

Meanwhile, a breakdown of Tier-1 banks’ AMCON levy and NDIC’s deposit insurance premium revealed that Access Holdings incurred the highest amount in the 2023 financial year.

Access Banks’ AMCON levy rose to N68.81 billion in 2023, an increase of 30.5 per cent over N52.73 billion in 2022. Its NDIC’s deposit insurance premium closed 2023 at N35.65 billion, a growth of 58 per cent from N22.53 billion declared in 2022.

Further findings revealed that GTCO recorded the least with N27.3 billion AMCON levy in 2023, representing 17.3 per cent increase from N23.3 billion in 2022, while its NDIC’s deposit insurance premium stood at N17.01 billion in 2023, representing about 18 per cent from N14.4 billion in 2022.

Access Holdings’s AMCON levy 30.5 per cent growth is on the backdrop of significant increase in the asset value of the newly restructured bank, which grew on the back of multiple mergers and acquisitions.

As of December 2023, Access Holdings recorded a total asset value of N26.69 trillion, which is nearly 78 per cent higher than the N14.99 trillion recorded in the same period of the prior year. At almost N27 trillion, Access Holdings is the largest financial institution in the country based on total assets.

Responding, GTCO said the increase in its operating expenses resulted from growth in regulatory costs- NDIC and AMCON expenses and the impact of depreciation of functional currencies across all jurisdictions wherein it operates. 

“Increase in regulatory charges – AMCON levy and Deposit Insurance Premium. AMCON levy increased by 17.3 per cent to N27.4billon from N23.3billion due to growth in the underlying total asset and contingents base at the Bank level to N5.46trillion in 2022 from N4.66 trillion in 2021 (AMCON levy is computed as 0.5per cent on preceding year’s total asset and contingents base),” GTCO explained in a presentation to investors and analysts.

On its part, Zenith Bank declared N57.38 billion AMCON levy in 2023, 30.4 per cent increase from N44.01 billion in 2022 while FBN Holdings in its unaudited result and accounts announced N50.1 billion AMCON levy in 2023, about 26 per cent increase from N39.76 billion in 2022.

In addition, UBA’s AMCON levy closed 2023 at N40.36 billion in 2023, representing an increase of nearly 29 per cent from N31.3 billion reported in 2022.

In December 2023, members of the Senate Committee on Banking, Insurance, and Other Financial Institutions, demanded the dissolution of AMCON over the failure to recover N5 trillion liabilities.

The lawmakers made the demand when the former Managing Director of AMCON, Ahmed Kuru, appeared before it to defend the agency’s budgetary allocation for the 2024 fiscal year.

AMCON was established in 2010 in a bid to stabilize the Nigerian banking system by efficiently resolving the non-performing loan assets of the banks in the economy.

Currently, it is being funded by a combination of loan recoveries, contributions from the CBN, sales of pledged assets, and a sinking fund assessed to the banks.

The federal government established AMCON with a 10-year mandate in response to the mounting bad loans and the requirement to prevent the banking sector’s impending collapse. The AMCON Act 2019 (Amended) gives the corporation broader authority to pursue obligors for unpaid debts.

Additionally, helping eligible financial institutions efficiently dispose of eligible bank assets in compliance with the Act’s rules is one of the key objectives of the Act.

Initially, banks were required to pay 0.3 per cent of all assets into the sinking fund. In 2013 it was raised to 0.5 per cent of total assets and 0.3 per cent of contingent liabilities.