12 banks pay N125.9bn to AMCON’s Resolution Funds

TWELVE lenders, Access Bank, First City Monument Bank (FCMB), Fidelity, FBN, GTCo, Stanbic IBTC, Sterling, UBA, Union, Unity, Wema, and Zenith Bank have paid a total sum of N125.9 billion to the Asset Management Corporation of Nigeria (AMCON) as Sector Resolution Funds in the first quarter (Q1) of 2022.

The fund is part of the requirement of the AMCON (Amended) Act 2015, which mandates banks to make contributions to a fund established by the Asset Management Corporation of Nigeria Act, effective from January 1, 2013.

According to data from the financials of listed banks, AMCON bank charges increased by 29.5 per cent from N97.18 billion paid in the corresponding period of 2021 to N125.9 billion in the review quarter. The increase in AMCON charge is attributed to the impressive rise in the total assets of the banks.

Available records show that in the first quarter of 2022, the aggregate total assets of the banks stood at N61.23 trillion, representing 5.29 per cent increase compared to the beginning of the year.

In the previous year, the total assets of the 12 banks had increased by a whopping N8.75 trillion, largely due to increased customer loans according to a report by the Nairalitics, the research arm of Nairametrics.

Banks are required to contribute an equivalent of 0.5 per cent of their total assets plus 0.5 per cent of all contingent assets as of the preceding year-end to AMCON sinking fund in line with existing guidelines.

This contribution is non-refundable for a period of 10 years from 2013, and does not represent any ownership interest.

The 12 banks have paid in excess of N1 trillion to AMCON between January 2017 and March 2022, and the charge is sometimes expressed as Sector Resolution Fund, AMCON sinking fund, or part of regulatory costs.

Further analysis indicates that First Bank Holdings paid the highest AMCON charges in Q1 2022 with N29.1 billion, an 89.6 per cent increase compared to N15.33 billion paid in the corresponding period of 2021.

This is following by a three per cent increase in its total asset to N9.21 trillion as of the same period. The holding company has paid over N207.49 billion to AMCON in the last five years.

Second on the list is Access Bank, with N26.69 billion, representing a 26.8 per cent increase from N21.04 billion paid in Q1 2021. Analysts believe that considering that Access Bank is also the largest commercial bank in the country based on total assets at N12.1 trillion as of March 2022, the amount paid is no surprise.

Zenith Bank followed with a N21.4 billion AMCON payment, which is 12.8 per cent higher than the N18.96 billion paid in the corresponding period of the previous year. Its asset stands at N10.52 trillion, the second-largest bank by asset. Zenith Bank has paid N151.63 billion in AMCON charges in the past five years.

GTCo and Stanbic IBTC followed on the list with N11.64 billion and N8.71 billion respective payments in Q1 2022, while their total assets stood at N5.49 trillion and N3.09 trillion.

AMCON was established in 2010 to buy the Non-Performing Loans (NPLs) of Nigerian banks to stabilise the banking system and is currently being funded by a combination of loan recoveries, contributions from the Central Bank of Nigeria (CBN), sale of assets pledged and a sinking fund levied on the banks.