AMCON Levy Reduce Zenith Bank, 10 Others PBT to N3.15trn in 3 Years

Kayode Tokede

If it wasn’t for the Asset Management Corporation of Nigeria (AMCON) banking sector resolution expenses, a total of 11 banks operating in Nigeria could have reported N3.77 trillion profit before tax (PBT) between 2019 and 2021, THISDAY investigation has revealed.  

The 11 banks, according to THISDAY investigation in three years reported a whopping sum of N3.15 trillion actual PBT, a difference of N617.55billion from supposed N3.71trn PBT in three years.

AMCON charges 0.5 per cent of Banks’ total assets on and off-balance sheet items and it is a statutory levy imposed by the 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 Bank of its shortfall in contributions to the banking sector resolution cost sinking fund for 2016 and 2017.

The rising toxic 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.

AMCON is saddled to recover nearly N5 trillion owed the country by debtors who for years now hide under all manners of technicalities to tie AMCON up in different courts to stall repayment.

The 11 banks are: Access Holdings Plc, Zenith Bank Plc, Guaranty Trust Holdings Plc, United Bank for Africa Plc (UBA), and FBN Holdings Plc, all Tier-1 banks.

Others include: Fidelity Bank Plc, Stanbic IBTC Holdings, FCMB Group Plc, Union Bank of Nigeria Sterling bank and Wema Bank Plc, as the total of six are Tier-2 banks.

Analysis of the 11 banks audited result and accounts showed that Zenith Bank has the highest PBT in three years, followed by GTCO, while FBN Holdings with its total assets at N8.9 trillion in 2021 has paid the highest amount as AMCON expenses in the period under review.

A breakdown showed that Zenith Bank in three years generated PBT of N779.53 billion and its AMCON cost was N97.52billion. Without the AMCON expenses, Zenith Bank could have reported N877.05 billion PBT between 2019 and 2021.

For FBN Holdings, it reported AMCON expenses of N138.59billion, contributing 43 per cent to its N325.65 billion actual PBT in three years. The Holdings could have reported N464.24billion PBT amid its soaring total assets, driven by steady increase in customers’ deposits and loans & advances to customers.

However, among the Tier-11 banks, THISDAY can report that Wema bank’s AMCON expenses increased to N12.05billion and the bank generated N25.07billion actual PBT in three years. Without the AMCON expenses, the bank’s PBT would have amounted to N37.12billion in three years.

Shareholders over the years have expressed dissatisfaction with the creation of AMCON, stressing that the charges discourage investing in bank stocks with dwindling dividend payout.  

Speaking with THISDAY, the Chairman, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie said AMCON 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.”

The National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Dr. Anthony Omojola said since the corporation was established by CBN, shareholders fought against it and are still feeling the impact on returns to shareholders every year.

He said, “AMCON has been taking away shareholders’ funds freely because they are part of the regulators since they have CBN behind them.

“They explained to shareholders AMCON wanted to clear toxic debt and by now, they should have cleared those funds and let shareholders start benefitting tremendously from investing in listed banks on the Nigerian Exchange Limited.

“AMCON has outstayed its usefulness and the creation was not necessary in the first place. Besides the toxic assets, who are those buying them from AMCON? Unfortunately, we Nigerians hate the truth and that is why you see the present state of the nation’s economy.” 

The Vice president of Highcap securities, Mr. David Adnori had said the AMCON expense was an agreement between the CBN and the banking community.

He expressed that, “When all the banks were having challenges in 2008, the idea of AMCON came up to absorb all the toxic assets. What was stopping shareholders from not complaining back then? What I think is that the shareholders complaining over the establishment of AMCON are ungrateful    and a set of investors who cannot understand what AMCON has done to protect the banking sector from collapse. Perhaps, they could have been happier if all the banks had collapsed like Skye bank.”

Analyst at PAC Holdings, Mr. Wole Adeyeye explained that: “Although, banks would have recorded higher profit before tax without AMCON expenses, but the corporation plays critical roles in supporting banks and the Nigerian economy.

“The AMCON expenses isused to help pay liabilities from acquiring Non-Performing Loans (NPLs) to keep the banking sector healthy. In addition, AMCON also assist banks to track debtors that are able, but unwilling or refusing to pay.”

However, the Managing Director/Chief Executive Officer of the AMCON, Mr. Ahmed Kuru had put the total recoveries from debtors at about N1.4 trillion.

According to him, the amount recovered so far include: cash – N681 billion; property forfeiture – N279 billion; share forfeiture – N140 billion; and other strategic assets – N208 billion.

In September 2019, Vice President, Prof. Yomi Osinbajo inaugurated an Inter-agency Committee to speedily resolve the challenges in recovering over N5 trillion AMCON debts.

Osinbajo, who inaugurated the committee, had tasked its members to deploy their expertise in the assignment to ensure that AMCON meets its mandate within a reasonable timeline.

In a bid to tighten the noose on the obligors, President Muhammadu Buhari in November 2021, signed into law the Asset Management Corporation of Nigeria (Amendment) Act, amending the AMCON Act No.4, 2010.

The Act provides for the extension of the tenor of the Resolution Cost Fund (RCF) and grants access to the Special Tribunal established by the Banks and other Financial Institutions Act 2020, which confers on AMCON the power to among others… “to take possession, manage, foreclose or sell, transfer, assign or otherwise deal with the asset or property used as security for Eligible Bank Assets (EBAs), and related matters,’’ just to mention a few.