Again, Shareholders Decry Plot To Extend AMCON Lifespan

•As Zenith, Access, GTBank, UBA Pay N138bn Into Sinking Fund

Leaders of shareholder groups in the country, on Monday, again urged members of the National Assembly not fail into the temptation of extending the 10-year lifespan of the Asset Management Corporation of Nigeria which expires next year.
The shareholders accused AMCON of feasting on cheap contributions to its sinking funds by Nigerian banks, even as recovery of the bad loans it bought at its inception in 2010 has slowdown.
Nigerian banks are required to pay a levy equal to 0.5%, (up from the initial 0.3%) of their total assets at the end of each year into the AMCON sinking fund
First to speak at the annual general meeting of Zenith Bank Plc in Lagos, Chief Timothy Adesiyan, President of the Nigerian Shareholders Solidarity Association, the nation’s premier shareholder rights group, wonders why the Central Bank of Nigeria (CBN) should continue to sustain the mandatory contributions to the AMCON sinking fund.
In a save-our-souls message to the Securities & Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), Pa Adesiyan lamented that the huge contributions to the fund continues to eat deep into the profit of banks and therefore the amount they could have declared as dividends.
Corroborating his assertion, Sir Sunny Nwosu, founding National Coordinator of the Independent Shareholders Association of Nigeria (ISAN) said the sustained contribution by bank to “the AMCON sinking fund is one issue we have been crying over for a very long time.”
He recalled for example that Zenith Bank alone contributed N28bn to the fund for the year ended December 31, 2018, after doling out N25.6bn in the prior year, no wonder, he continued, “AMCON is working to elongate its lifespan.
“Now, they have gone to the National Assembly (to lobby for) elongation of the lifespan,” he said, urging well-meaning Nigerians to help in the advocacy to ensure the corporation does not overstay its welcome.
Nwosu noted that the project AMCON as a distress resolution vehicle for Nigeria’s troubled financial system was embraced by shareholders at the onset mainly because the enabling Act stated a lifespan of 10 years, an agreement, he said should be respected.
So far, Zenith Bank, Guaranty Trust, United Bank for Africa and Access Banks are among those that have published their 2018 audited financials.
The quoted, according to their audited financials for the year ended 2018, contributed N137.855bn into the AMCON sinking fund in two years.
Checks by Investdata News showed that while the four of them pooled N72.299bn in 2018, total contribution to the fund in 2017 was N65.556bn, with Zenith Bank leading the pack after doling out N28.542bn, from N25.561bn in 2017; followed by Access Bank’s N20.035bn, up from N17.378bn; GTBank, N16.307bn, up from N15.623bn; while UBA was levied N7.345bn in 2018, as against prior year’s N6.994bn.
During the 2018 financial year, the Central Bank of Nigeria (CBN) “notified all banks pursuant to Section 9c of the AMCON (Amendment) Act 2015, of the shortfalls in contributions for years 2016 and 2017 arising from misinterpretation of the definition of “Total Assets” as contained in the Resolution Trust Deed as against the definition provided in the AMCON Amendment Act 2015.”
Consequently, UBA Plc says it plans to pay the said shortfall of N2.412bn in equal installments over a period of five years, beginning from this financial year 2019.
The corporation, charged with the responsibility of stabilising and revitalising the Nigerian financial system by efficiently resolving the non-performing loan (NPL) assets of the banks, free up valuable resources and enable the banks focus on their core activities, was established via an Act of the National Assembly in July 2010 with a 10-year lifespan.
The Act provides for a sinking fund with an annual N50bn contribution by the CBN and 0.3% of total asset value of all commercial banks for the purchase of FG Securities, while returns from the investment will be returned and then redistributed among the contributing commercial banks. The fund is administered by a consortium of members from the participating banks which will be rotated annually to allow even participation among participating banks.
According to latest data by corporation, there are currently 12,000 debtors with total outstanding obligation of N3.7tr, out of which the corporation outsourced 6,000 accounts valued at N740bn or 20% in 2016. The corporation, which last year published a list of recalcitrant debtors, had also in the recent past accused some obligors of employing delay tactics to avoid payment of the debt, taking advantage of the lifespan.
At inception, the corporation identified 10 crisis-ridden banks in the system, into which it injected N736bn to suck their toxic assets: Mainstreet, Keystone and Enterprise banks were unable to meet up and were acquired by AMCON and tagged Bridge Banks. Keystone Bank has since been sold to a pension firm.

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