AMCON Gulps N654bn from 12 Banks as Sector Resolution Funds in 4 years

Kayode Tokede
With the growing assets due to business expansions, among other factors, Assets Management Corporation of Nigeria (AMCON) between 2020 and 2017 has collected N6654billion from 12 banks operating in the country.

The 12 banks are Access bank Plc, United Bank for Africa Plc, Zenith bank Plc, FBN Holdings and Guaranty Trust Holdings Plc.

Others are Fidelity Bank Plc, Stanbic IBTC Holdings Plc Union Bank of Nigeria FCMB Group Plc, Sterling Bank Plc Wema Bank Plc and Unity Bank Plc.

The corporation charges 0.5per cent of Banks’ total assets on and off balance sheet items and it is a statutory levy by imposed by Central Bank of Nigeria (CBN) on all banks operating in Nigeria.

The CBN, pursuant to Section 9(c) of the AMCON (Amended) Act 2015, informed the banks of the shortfall in contributions to the Banking Sector Resolution Cost Sinking Fund for 2016 and 2017.

The rising bad loans and the need to save the banking industry from imminent collapse prompted the federal government to set up AMCON in 2010 with a 10-year mandate.
The AMCON Act 2019 (Amended) grants the corporation more powers to recover bad debts from obligors.

THISDAY investigations revealed that AMCON in 2020 collected N203.72billion from the 12 banks, an increase of 20 per cent from N170.24billion in 2019.
In addition, AMCON levy between 2018 and 2017 was N147.42billion and N132.5billion respectively.

The apex banks in its Financial Stability Report in 2018 had disclosed 15 banks injected N228.28 billion in the AMCON levy.

According to the report, “The carrying value of AMCON’s liabilities increased from N4.53 trillion at end-June 2018 to N5.43 trillion at end-December 2018, arising from the Corporation’s investment of N898.45 billion in Polaris Bank Limited.

“AMCON’s liabilities of N5.43 trillion was projected to be covered by the Banking Sector Resolution Cost Trust Fund (BSRCTF) and the corporation’s internal credit recoveries and asset sales. Contributions to the BSRCTF by the CBN and 15 participating banks for year 2018 was valued N228.28 billion.”

Extracts from banks audited result and accounts on the Nigerian Exchange Limited (NGX) revealed that FBN Holdings, followed by Access Bank and Zenith bank are the top Tier-1 banks with highest AMCON levy in the banking sector.

In the last four years, AMCON has collected N152.3billion as sector’s resolution funds from FBN Holdings and it has contributed 24.4 per cent to FBN Holdings N623.8billion total operating expenses in the last four years.

Zenith bank and Access bank reported N113.7billion and N95.5billion banking resolution funds in the last four years, while GTCO reported N64.62billion AMCON levy between 2020 and 2017.
Another Teir-1 bank, United Bank for Africa reported N57.5billion AMCON’s levy in the years under review.

Stakeholders have criticised the establishment of AMCON, stressing that the corporation is ripping shareholders of their Return on Investment (ROI) when chunk of profit is paid as levy.

The Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie said the corporation has over stayed its function in the banking sector.
He called on the banking sector to suspend funding AMCON as it is affecting on shareholders profit.

He said, “AMCON is lobbying the federal government to extend its operations. If 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 to 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.”

The National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), Sunny Nwosu recently said: “The continuous contribution of a non-refundable levy to AMCON by all banks in Nigeria, in spite of the difficult business operating environment any without ownership interest, rights or obligations on the contributor amounts to institutional scam.”
He maintained that the shareholders association had previously opposed the sinking fund, still opposed the failed policy project and urged the federal government to liquidate AMCON and enhance shareholders returns and the economy.

Analyst, Mr. Rotimi Fakeyejo noted that AMCON activities have allowed survival of the banks but it has contributed to tax payers funds.

He added that: “Shareholders were not put into consideration but for banks’ depositors, the levy has safe guided the sector. Speaking from a different perspective, the Vice president, Highcap securities Limited, Mr. David Adnori noted that the corporation job in the banking sector is work in progress.

“I do not think AMCON has concluded its assignment since a lot of ground needed to be cover. The N600billion AMCON’s levy on these 12 banks is sinking funds and the corporation was created to mop-up toxic assets from the banks.

“It is a great development that AMCON has collected over N600 billion from 12 banks but I do not see them closing by 2023 since most of the assets collected have started performing.
The Managing director and chief executive of AMCON, Ahmed Kuru, had said if the banks debt owed to the CBN are not fully repaid before the sunset date of 2023, banks will continue to pay into the fund which will then be with the CBN.

He had expressed that banks’ contribution to the sinking fund in recent years have been low and had not been able to pay out of its debt or enough to pay the interest.

According to the funding arrangement of the corporation, commercial banks are supposed to provide 70 per cent while AMCON operations was supposed to provide 30 per cent.

Kuru noted that the contribution of the banks was done on the basis of a growth rate of 20 per cent, however, the growth rate of commercial banks’ total assets have in recent years fallen below 10 per cent year on year.

Kuru who is optimistic that AMCON operations would be wound over by 2023 or 2024 noted that the contributions of banks into the sinking fund will continue until the debt is fully repaid.