Stakeholders Furious as Seven Banks Pay N635.5bn AMCON Levy in Three Years

Kayode Tokede

Stakeholders in the financial service sector has expressed dissatisfaction with the massive Asset Management Corporation of Nigeria (AMCON) levy incurred by banks in the last three years.

Zenith Bank Plc and six other Deposit Money Banks (DMBs) in Nigeria paid an estimated N635.5 billion as   banking sector resolution costs to the AMCON between 2022 and 2024.

The remaining six DMBs are: Guaranty Trust Holding Company Plc (GTCO), United Bank for Africa Plc (UBA), Fidelity Bank Plc, Wema Bank Plc, Stanbic IBTC Holdings Plc and FCMB Group Plc.

The breakdown showed that the seven banks paid N297.58 billion, as AMCON levy in 2022. In 2023, it stood at N187.2 billion and N150.78 billion in 2024.

Banking sector resolution cost represents the corporation levy, which is applicable on the total balance sheet size of the banks. The current applicable rate based on AMCON Act of 2015 is 0.5 per cent of total assets plus total off balance sheet assets.

In their latest financial year statement, THISDAY can report that the seven DMBs generated an estimated N93.65 trillion in total assets in 2024, about 48 per cent increase over N63.18 trillion declared in 2023.

Also, the seven banks declared a whopping of N3.99 trillion as profit before tax, representing an increase of 54.18 per cent from N2.43 trillion in 2023.

Zenith Bank, with a total asset of N29.56 trillion in 2024, paid AMCON levy of N92.2 billion, up by 60.6 per cent from N57.38 billion reported in 2023.

UBA’s AMCON levy closed 2024 at N71.91 billion, representing an increase of 78.1 per cent from N40.36billion declared in 2023, while GTCO announced N36.7 billion AMCON levy in 2024, a growth of 34.2 per cent from N27.31 billion declared in 2023.

GTCO in a presentation noted AMCON levy, among others contributed to its N403 billion operating expenses in 2024, up by 61 per cent from N250.4billion in 2023, with non-controllable cost mix improving to 28.9 per cent of the total operating expenses in FY-2024 from 33.3 per cent in FY-2023.

The bank in the presentation said, “Increase in regulatory charges – AMCON levy and Deposit Insurance Premium. AMCON levy increased by 34.2 per cent (N36.6 billion vs N27.4 billion) due to growth in total Asset and contingents base (N7.33 trillion vs N5.46 trillion).  Also, deposit insurance premium increased by 28.9% (N21.9 billion vs N17.0 billion) due to a 48.1 per cent increase in underlying customers’ deposit volume (N5.26 trillion vs N3.55trillio).”

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 Central Bank of Nigeria (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 0.5per cent of total assets (and 0.3 per cent of contingent liabilities).

Meanwhile, capital market stakeholders have expressed mixed feelings over 0.5 per cent AMCON levy on banks.

The Investment Banker & Stockbroker, Mr. Tajudeen Olayinka in a chat with THISDAY said the operations of AMCON is long overdue.

“The fact that AMCON continues to place yearly levies on banks in the country in an endless manner, is an indication that AMCON is unable to pay its debts, and that its birth as a failure resolution option was unnecessary or absolutely misplaced at the time it was conceived.

“Those failed banks could have been better managed with more robust failure resolution options outside AMCON arrangement. And I blame the governor of CBN at that time, Sanusi Lamido Sanusi, for the error,” Olayinka explained.

President Pragmatic Shareholders Association, Mrs. Bisi Bakare, also backed Olayinka’s AMCON overdue in the banking sector.

“Even those debts that have been taken over by AMCON, what has been the level of recovery? There continuing stay is more like a waste conduct pipe that has consequences on shareholders’ fund in the Nigeria’s banking sector,” Bakare echoed.

Speaking from a different perspective, the MD/CEO, Globalview Capital Limited, Mr. Aruna Kebira, said, “AMCON was established and was given powers to operate in its jurisdiction. Its life span would have also been determined by the laws that established it. It being around continuously is a function of the operational ambit and the powers vested on it by law. It will take the federal government to determine whether it has overstayed its welcome, even if the citizens are crying blue murder.”

In addition, Vice President, Highcap Securities, Mr. David Adonri said, “AMCON was set up as a bad bank to mop up the Non-Performing Loan (NPL) of banks. In collaboration with banks, AMCON created a Sinking Fund into which banks were to contribute.

“AMCON issued zero coupon bonds to securitize the NPLs which it hoped to redeem from the Sinking Fund. It is therefore likely that the so called AMCON levies on banks paid last year and previous years are indeed their annual contributions to the Sinking Fund they agreed with AMCON to set up to clean up their books.”