By Chinwendu Obienyi
Shareholders of Nigeria’s leading banks have expressed growing concern as contributions to the Asset Management Corporation of Nigeria (AMCON) by tier-1 financial institutions skyrocketed to N393.03 billion at the end of the 2024 financial year.
The unprecedented increase has raised red flags about its potential impact on bank profitability and shareholder returns despite the banks’ dividends announcement.
According to financial disclosures reviewed for the period ending December 31, 2024, banks including; Access Holdings Plc, FBN Holdings Plc, Guaranty Trust Holding Company (GTCO), United Bank for Africa (UBA) and Zenith Bank collectively paid N393.03 billion which was significantly higher compared to N244.98 billion in the same period in 2023.
The figure represents a 292.7 per cent increase in mandatory contributions which stems from a recalibration of the AMCON levy formula, which ties annual charges to banks’ total assets and off-balance-sheet exposures.
Specifically, Access Holdings paid a levy of N112.23billion as compared to N68.81 billion in the previous financial year, FBN Holdings paid N80.03 billion as against N51.12 billion while GTCO paid N36.66 billion as compared to N27.31 billion in 2023. UBA had paid N40.36 billion to the corporation in 2023 but the bank paid N71.91 billion while Zenith Bank paid N92.20 billion compared to N57.38 billion.
This development has led to many investors who are aggrieved and warn that if these levies are continued to be paid, banks’ earnings could be eroded and by extension, keep dampening dividend payouts.
Chairman, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie who has been a vocal critic of the Corporation’s levies imposed on banks, asserted that AMCON has exceeded its intended lifespan in the banking sector.
He called for banks to suspend funding AMCON, arguing that the continued levies are negatively impacting shareholders’ profits and discouraging investment in bank stocks due to dwindling dividend payouts
“This level of increase is alarming. We are effectively being penalized for the sector’s past inefficiencies, despite strong fundamentals and improved performance among tier-1 banks. I have constantly said that the creation of AMCON is unjustified. If the federal government wishes to sustain AMCON, it should fund the corporation directly, not through levies on banks.
In the past few years, they (AMCON) have been reporting losses despite collecting significant levies from banks and facing challenges in selling recovered assets from debtors. Have they been very effective when banks faced crises? The answer is No, what they just do is take and take. For me, the shareholders are being short-changed”, Okezie lamented.
Sharing Okezie’s sentiments, the President, Pragmatic Shareholders Association of Nigeria, Bisi Bakare, questioned the corporation’s effectiveness of its debt recovery efforts. “Even those debts that have been taken over by AMCON, what has been the level of recovery? Their continued stay is more like a waste conduct pipe that has consequences on shareholders’ funds in Nigeria’s banking sector,” She said.
AMCON was established in 2010 to absorb non-performing loans and stabilize the Nigerian banking sector in the aftermath of the 2008 financial crisis. While the agency has made progress in recovering debts and cleaning up bank balance sheets, it continues to rely heavily on contributions from the banking industry to fund its operations.
The latest hike in bank levies, however, has reignited debate over the fairness and sustainability of the current recovery model.
Bank executives, while complying with regulatory requirements, have also flagged the implications for long-term capital planning. Some warn that sustained increases could stifle investments in innovation, lending, and expansion.
“We support AMCON’s mandate, but there must be a balance. The burden must not cripple the very institutions it aims to protect”, a senior executive of one of the affected banks said.
The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, has not made any public statements specifically addressing the Asset Management Corporation of Nigeria (AMCON) or the increased levies imposed on banks.
However, during the 2023 Bank Directors’ Summit in Abuja, Mustafa Chike-Obi, Chairman of the Bank Directors Association of Nigeria (BDAN), called on the federal government to halt the AMCON levy, citing its heavy cost on the banking industry.
Cardoso, represented at the event by a CBN Director, Chibuzo Efobi, emphasised the importance of regulations in maintaining compliance and curbing excesses in the banking sector, particularly in light of technological advancements in banking operations.
With the development expected to generate more debate, market watchers and investors will be watching to ensure the FG comes up with a more equitable framework that aligns with broader financial sector development goals.