Senate panel: AMCON still holds massive loans in its portfolio… we’re helping it achieve its mandate

Tokunbo Abiru, chairman of the senate committee on banking, insurance, and other financial institutions, says the panel is focused on helping the Asset Management Corporation of Nigeria (AMCON) recover outstanding debts.

Abiru, who also represents Lagos east district, spoke at the 2024 senate committee on banking retreat with AMCON on Saturday.

Abiru praised the corporation for stabilising the banking industry, saving thousands of jobs, and restoring confidence in the financial sector.

“You will recall that following the signing into law of the AMCON Bill in July 2010, the Corporation was established as an intervention agency to halt the drift caused by Non-Performing Loans (NPLs) in the banking industry with its adverse impact on savers and the entire economy,” he said.

“From available records, the Corporation had acquired at inception over 12,000 NPLs worth about N3.7 trillion from 22 commercial banks and injected a colossal amount as financial accommodation to 10 banks.

“Admittedly, the setting up of AMCON has succeeded, to a large extent, in not only stabilising the banking industry given that the purchase of Eligible Banks Assets (EBA) reinjected the much-needed liquidity into the Banking System, but also helped in restoring confidence in the financial sector.

“Without any doubt, AMCON was established at a time of considerable turmoil in the wake of the global financial crisis of 2008 to clean up the books of many ailing banks.

“It can be said that as a result of AMCON’s interventions, thousands of jobs were saved as a number of banks were rescued from the brink of collapse.”

Abiru, however, said AMCON was not designed to be a permanent part of the country’s financial system, noting that the agency is expected to close in 2026.

“I am aware that the AMCON Amendment Act of 2021 extended the life of AMCON for another 5 years although it provides that the current tenor may be extended by a resolution of the National Assembly,” the chairman said.

“So, we now stand at a pivotal moment where we must transition beyond AMCON as it is near impossible for the corporation to recover the substantial loans by 2026 when it is expected to wind down.”

Abiru said despite 14 years of existence, the corporation still holds massive loans in its portfolio, estimated at around N5 trillion, with a significant portion of the debt owed to the Central Bank of Nigeria (CBN).

Earlier, Gbenga Alade, the chief executive officer (CEO) of the corporation, said AMCON has disbursed a total of N4.1 trillion for asset purchases and financial accommodation to banks since its establishment.

Updating journalists on the agency’s repayment performance, Alade said AMCON has paid N3 trillion to the CBN, with about N3 trillion still outstanding due to interest accruals.

In response, Abiru said he expected the retreat to produce more effective options for handling the outstanding loans beyond the strategies already in use, citing the example of the Korea Asset Management Company (KAMCO).

“It goes without saying that a major challenge remains how to recover the taxpayers’ money used to purchase the EBAs so they can be channelled to critical areas such as education, health, and provision of infrastructure,” the chairman said.

Abiru acknowledged that many businesses in Nigeria are currently battling economic challenges, making debt recovery efforts much more difficult.

He said the committee is developing a structure that will provide a definite timeframe for AMCON to achieve its set goals.