AMCON recovers over N644bn in 5 yrs, posts loss of N304.35bn in one year

In over five years of operation, the Asset Management Corporation of Nigeria (AMCON)  has succeeded in recovering over N644 billion, even as it declared  a 2015 loss of N304.35 billion  ($982 mln), wider than previous year’s loss of N275.49 billion, after it wrote-down the value of collateral recovered from its purchase of bad loans.

The “bad bank” on Friday, also said it has successfully settled over 56 per cent of the total N3.7 trillion (about N2.072 trillion) bad debts it had to manage from various individuals, groups and organisations in the country.

Nigeria’s “bad bank” AMCON on Thursday posted a 2015 loss of N304.35 billion  ($982 mln), wider than last year’s loss of N275.49 billion, after it wrote-down the value of collateral recovered from its purchase of bad loans.

Executive Director, Aminu Ismail, said the 2015 loss was also partly due to interest paid on a N3.8 trillion  ($12.3 bln) bond due to the central bank which it used to acquire the bad loans.

AMCON was set up in 2010 to absorb bad loans as part of activities targeted at resolving a financial crisis in Nigeria.

He further said NPL ratios jumped to 93 per cent of its total bad loans in 2015, up from 57 per cent a year earlier, as the weak economy impacted debt repayment.

Ismail said AMCON stopped buying NPLs two years ago and was now focused on recoveries to enable it to wind-down its activity by 2023, when its debt to the central bank matures.

Only recently, the corporation said its involvement in receivership of about 50 businesses and more than 180 businesses under enforcement do not mean that it is running businesses as perceived by some people, but plans to introduce the “real-estate investment scheme” by the end of the year to raise money to meet its bond repayments, Chief Executive Officer, Ahmed Kuru, said in an interview. “It plans to sell the properties when the economy improves and the assets can attract fair value,” he was quoted as having said.

“The agency is confiscating more assets than its receiving from its recovery efforts as businesses battle to sell products and generate cash,” Kuru added.

Companies that owe money to AMCON are struggling to meet their debts as the Nigerian economy heads for a recession because of a slump in crude prices that crippled foreign-exchange supplies.

Meanwhile, a levy that sees banks pay 0.5 percent of their assets annually generates as much as N190 billion for AMCON and is helping the agency fill funding gaps, Kuru said.

The agency purchased about 14,000 non-performing loans at a cost of N3.9 trillion in a government-led bailout of ten banks following the 2009 banking crisis.

Although Mr. Kuru clarified that the settled cases did not translate into actual money in the government’s purse, it was sufficient pointer that AMCON was already on its way to meeting its objective of protecting the country’s economy and removing bad debts in the financial system.

The managing director said AMCON was neither set up to make profit within a 10-year lifespan, nor to kill businesses, but to deliver a social benefit of saving the economy and businesses from bad debts.

“The most important thing, like we always tell our debtors, is to come and talk to us. We are supposed to help them. We are supposed to support them. AMCON is not out to kill businesses, rather to support businesses. We have records to show businesses that we have supported and continued to support,” he stated.