The Federal Government, through the Central Bank of Nigeria, remains the main creditor (and owner) of the Asset Management Corporation of Nigeria (AMCON) holding N5.3 trillion of its bonds (including N1.3 trillion bonds issued to acquire Polaris Bank).
Managing Director, AMCON, Ahmed Kuru made the disclosure during a media forum in Lagos.
He said that from all indications, the AMCON may still have a long way to go in meeting its recovery mandate as the majority of 350 individuals and business entities with 84 per cent of the yet-to-be-recovered debts have tied AMCON down in courts, a situation that has stalled efforts to resolve the cases.
Kuru, during a recent meeting with the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, was told the Federal Government was working towards winding down the asset management behemoth, established at the height of the non-performing loan crisis in 2010, to clean up the heavily encumbered books of the banks.
But attempt to wind down AMCON’s operations (established by an act of the parliament and given more biting power by subsequent amendment) to go after bad debtors could be premature with government having to create another channel to offset the debt instruments the Central Bank of Nigeria (CBN) issued to fund AMCON’s operations ab-initio.
Revelations by Kuru, during an interactive session suggest that the company is far from resolving the pending cases as litigation stalls processes leading to quick resolution of the pending cases. According to Kuru, 257 cases out of the 350 obligors who sit on over 84 per cent of dead assets of banks inherited by AMCON are currently at different stages of litigation. Hence, he said, the underlying assets used as collateral cannot be liquidated by the organisation just like that.
Kuru also hinted that some obligors of AMCON were jubilant, and some even stopped picking our calls thinking that they will walk away from the debt once AMCON winds down. He said, “When some of them (the obligors) heard the news of the proposed AMCON sunset, they stopped picking our calls. So, in their mind, they believe AMCON would soon close shop, which would mean that the government would write-off the debt. I want to state here today that the process of winding AMCON down will be a process, and nobody, no government would allow any debtor walk away. It is not possible,”
Further information released by AMCON claimed that 350 obligors or 2.8 per cent of the total 12,700 debtors involved in the non-performing loan (NPL) hold 84 per cent of the total amounts, which have continued to accumulate interest. From inception, Kuru also disclosed in Lagos , that the Corporation has only sold 350 assets, while most are not in the market owing to legal encumbrances. But apart from litigation, pricing may have also slowed the speed of disposing of the assets. The pricing template is set by the CBN guidelines, which set the value above what prospective buyers consider above-market prices.
For instance, Kuru revealed that more than 100 assets have been in the market for some time but “there are no buyers because they are overpriced owing to their purchase prize. He added, “Pricing of AMCON assets is very strict. Even when we get permission from the Central Bank to auction, we cannot still sell some of them because the price is still very high. It is not a case of picking the highest bidder, but a case of management getting an offer that must cover the debt an asset is pledged.”
The AMCON boss asked the affected debtors who are interested in resolving their cases with the Corporation to make a serious offer, saying it “understands that the transactions involved are commercial and not criminal.” He said owners of Arik and other seized assets must present resolution strategies that make sense to AMCON, the CBN and the Ministry of Finance if they truly want to be listened to.
