AMCON, Mr. Mustafa Chike-Obi

By Obinna Chima

As part of efforts to minimise risk in the system, the Asset Management Corporation of Nigeria (AMCON) has advised the board of directors of banks to be actively involved in deciding large-ticket facilities to be given out to customers.

Managing Director/Chief Executive Officer, AMCON, Mr. Mustafa Chike-Obi, gave this advice in a speech presented at a recent workshop on credit and debt recovery organised by Monbasab Ventures Incorporation in Lagos, a copy of which was made available to THISDAY at the weekend.

The AMCON boss who was represented by the Head, Loan Management, AMCON, Mr. Kamilu Omokide, stressed that a good board would always define risk appetite, risk philosophy and approve the credit policy of the bank.

Chike-Obi also said that the credit approval limits of the board should be exercised by the board and not by the executive management.

He explained: “In addition, the board should receive, review and debate the comprehensive quarterly portfolio report of the bank detailing adherence or non-adherence to the credit policies of the bank and regulatory limits. It must also eschew conflict of interest.

“Corporate governance is not just the setting up of a board with distinguished men and women. It is not limited to their holding meetings and representing the bank in public events. Corporate governance is the system by which companies are directed and controlled.

“It involves regulatory and market mechanisms, and the roles relationships between a company’s management and its board, its shareholders and other stakeholders and the goals for which the corporation is involved.”

Chike-Obi argued that market regulations, especially by the Central Bank of Nigeria (CBN) were not intended to interfere with the entrepreneurial zeal and objectives of owners of banks.

“They are genuinely designed to ensure the stability of the banking system and to reinforce monetary policies. They are for the common good of all. Therefore avoiding or evading them should not be celebrated. Regulations should be understood and transparency adhered to.
“The owners and managers of banks must see the big picture in their actors. It is well known that the fall of one of the banks can create a domino effect that could lead to the fall of others or at least, weaken others,” he stated.

He also suggested that financial institutions encourage their workers to undertake credit training, even as he urged banks to share risk and eschew “bandwagon lending.”

According to Chike-Obi, AMCON had purchased 12,6000 loans with total exposure of about N3.577 trillion, for which it paid a total of N1.596 trillion.