•10 financial institutions cough out N230bn as fees
By Chinwendu Obienyi
If the statutory meaning of AMCON is Asset Management Corporation of Nigeria, shareholders of banks, and companies that have associated with it from inception have sarcastically labelled the Corporation a “Mismanagement Consortium”.
Established by an Act of the National Assembly in July 2010 with an intended 10-year lifespan, targeted at rescuing financial institutions and other organisations embroiled in heavy debt trap as interventionist government agency.
But over the course of its lifespan, bank insiders, equity shareholders as well as institutional investors have continued to groan under its excessive regulatory cost amid weak operating environment, prompting many to declare that the Corporation has outlived its usefulness.
They further added that AMCON’s mission to be a stabilising tool for resolving the non-performing loan assets of banks and corporate organisations, assisting to recapitalise distressed institutions in grave danger of mismanagement of acquired assets in manners consistent with minimum resolution cost, have so far been defeated.
It was reported that some companies had voluntarily approached AMCON with a proposal for support towards revamping them.
But it was alleged that contrary to its line of ‘duties’, rather than playing its role, some interests in the corporation have pursued an agenda of selling off assets of those companies to their cronies. At times, politics has been a determinant of which companies are badly assessed or categorised.
Daily Sun investigations can reveal that in the past 4 years, Nigerian banks have incurred N850.89 billion in AMCON charges.
For instance, the largest financial institutions by market capitalisation and total assets collectively incurred N205.30 billion in AMCON charge in 2021 alone, which is 24.56 percent higher than 2020’s N164.2 billion.
Furthermore, ten other quoted commercial banks on the Nigerian Exchange Limited (NGX) incurred N227.3 billion in banking sector resolution costs to the Asset Management Corporation of Nigeria (AMCON) in the financial year of 2022.
Access Holdings incurred N52.73 billion on AMCON expenses in 2022, representing a 27 per cent increase when compared to N41.51 trillion recorded in the previous year.
Zenith Bank recorded N44.01 billion as sector resolution cost for the year ended 2022, 16.1 per cent higher than the N37.92 billion incurred in the previous year, while UBA incurred N31.59 billion on AMCON fees in 2022, surpassing the N27.98 billion recorded in the previous year by 12.9 per cent, GT Bank AMCON charges stood at N23.29 billion while Fidelity Bank recorded N18.29 billion.
Stanbic incurred N14.6 billion, Union Bank incurred N14.33 billion, FCMB and Sterling Bank recorded N12.84 billion and N9.17 billion while Wema Bank incurred N6.47 billion, resulting in a total of N227.3 billion.
Reacting to this, analysts as well as shareholders said it is unfair for banks to be mandated to pay for the mistakes of beleaguered peer rivals in perpetuity. They wondered what the corporation has been doing with billions of Naira in AMCON charges it collects from financial institutions each financial year.
According to them, the compulsory levy has added to banks’ woes as it is the second largest expense item in their books, and that is on top of inflationary pressures, exchange rate movement and energy costs ballooning the cost to income ratio.
Speaking at a recent Annual General Meeting (AGM), the National Chairman, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, said that the shareholders were worried by AMCON’s resolutions regarding what the banks should contribute.
Okezie said that the banking stocks were no longer attractive to both local and foreign investors because of decreased dividends, concerns over regulatory penalties and threats to banks shareholders’ funds. According to him, strict regulatory policies and levies have made it difficult for banks to lend to the real sector of the economy.
“AMCON should close shop and should not continue to exist to the detriment of the shareholders and the national investment,” Okezie said.
Also, Mr. Sunny Nwosu, the National Coordinator, Independent Shareholders Association of Nigeria (ISAN), said that the shareholders were groaning under poor dividends and low capital appreciation while AMCON was collecting 0.5 per cent of banks’ total assets annually.
He said that this had made most of the banks that contributed to AMCON unable to declare dividends during the period under review. Nwosu also said that the banking sector was over regulated and called for a review of the various policies introduced by the CBN in the interest of the economy.