The Chairman of House of Representatives Committee on Banking and Currency, Hon. Jones Chukwudi Onyereri, has said the House of Representatives will not be lured into supporting the â€˜deceptiveâ€™ plot orchestrated by some people to lure Asset Management Corporation of Nigeria (AMCON) to purchase new debts from Deposit Money Banks (DMBs) in the country.
Onyereri, who addressed his colleagues in Enugu State at the opening of the retreat for lawmakers which was declared open by the state Governor, Ifeanyi Ugwuanyi, said the members argued that it would not be the right decision for the country considering the state of the economy, which is on the pathway to recovery after sliding into recession.
He said: â€œWe are also aware that some economists are clamouring for AMCON to buy more toxic assets from the Eligible Financial Institutions (EFIs) in view of the very high level of the non-performing loans that are worse than the 2009 experience and far above the regulatory threshold. We wish to sound a note of warning that this committee will not support any such move; at least not at a time like this in the history of our economy.â€
According to the chairman, the lawmakers are happy that AMCON, as an interventionist institution of the federal government, has performed above board since it was created, but are worried that the corporation is often constrained by institutional and legal stumbling blocks from achieving optimum results.
He said that was why the House in 2015, amended certain parts of the AMCON Act to further strengthen the institution-which included the establishment of the resolution sinking fund.
Apparently piqued that AMCON is seriously challenged, Onyereri again said: â€œThese legal and institutional bottlenecks arise from â€˜Lack of co-operation from EFIs; issues relating to Clawback on EFIs and intervened banks; wrong interpretation of the AMCON Act, which has led to conflicting decisions by the courts especially where it relates to possessory and freezing orders and disingenuous acts of the obligors, who exploit our court processes and short comings in the extant statute to frustrate the efforts of the corporation in recovering the loans from obligors.
â€œI find it troubling that while some of these obligors frustrate AMCON recovery efforts by exploiting the court system, they continue to do business with the federal government and get paid. These issues contribute a lot in hampering the efforts of the corporation and must be nipped in the bud through proactive legislative instruments. We have to find ways to ensure better cooperation from the EFIs to enable AMCON effectively recover these loans. Where they are not willing to cooperate with AMCON, then AMCON must and should enforce its right of claw back on the EFIs. It is important to remember and note that public funds were used to buy these loans that helped prevent the EFIs from going under and as a matter of public urgency AMCON needs to recover these monies. Likewise, there is need to sensitise the courts on the need for speedy resolution of AMCON cases that are before it. The court processes need to be streamlined and obligors prevented from using technicalities from circumventing the process.â€
Managing Director/Chief Executive Officer of AMCON, Mr. Ahmed Kuru, disclosed to the committee that the corporationâ€™s recent assessment of obligors as at December 31, 2016, identified 350 accounts with a current exposure of N2.5 trillion that represent about 80 per cent of AMCONâ€™s total obligor debt. â€œAMCON has also repositioned its debt recovery approach to strengthen legal and credit restructuring units to collaborate on the aforementioned 350 accounts termed â€œdefaultersâ€, enhance the restructuring and turn around team and engage in asset tracing to enhance recovery in spite of the difficultiesâ€, Kuru said, adding that â€œAMCON continues to persevere in the face of adversity.â€
Providing additional insight into the challenges of AMCON, Kuru lamented that the ramifications for failure by AMCON to recover its debt, principally owed to the Central Bank of Nigeria (CBN), cannot be quantified as it goes beyond economic cost. According to him, in the last two years, AMCON debt repayment to the CBN were N456.4 billion and N517.7 billion but actual payments were N256.7 billion and N191.1 billion in 2015 and 2016 respectively.
According to him, â€œThis translates to a funding shortfall of N199.7 billion and N326.4 billion in 2015 and 2016 respectively. Of this shortfall, repayment due from AMCON in 2015 and 2016 represented 42 per cent and 53 per cent while the resolution cost fund represented 58 per cent and 47 per cent in 2015 and 2016 respectively. The funding plans envisaged contribution of 70 per cent from the resolution cost fund and 30 per cent from recovery.â€
Going by all these challenges of AMCON, Kuru told the lawmakers to be mindful of the proposed bill of the Nigerian Assets Management Agency (NAMA). He stated categorically that â€œâ€¦we note that this committee is reviewing the proposed bill of the NAMA and request that the committee also considers its impact on AMCON.â€