Wednesday, 17 April 2013

‘AMCON Acquired N400bn Non Performing Loans in Oil Sector’

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The Asset Management Corporation of Nigeria (AMCON) expended a total of N400 billion in the purchase of Non Performing Loans (NPLs) in the downstream oil and gas sector, THISDAY has learnt.

A document obtained by THISDAY stated that as a result of the intervention by the corporation, the oil and gas sector had received further funding from the banking sector and sustained the supply of finished products to the market.

It also showed that AMCON intervened in the agricultural sector availing the sum of N31 billion, thereby preventing job losses and positively affected related industries with multiplier effect on the country’s Gross Domestic Product (GDP). It further put the total cost of AMCON’s intervention in the construction industry at N19 billion.

AMCON, wholly owned by the Federal Government, was established by the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance with the mandate to soak up bad loans and help recapitalise the banks.

A clear case for the corporation was the large volume of NPLs in the banking sector then, which was partly caused by the global economic meltdown and the failure of some local businesses.

AMCON was modeled after successful international asset management companies, such as the KAMCO in Korea, and mostly closely to Malaysia’s Danaharta and Danamodal and NAMA in Ireland.

“In spite of the hostility of some debtors, the recovery process includes the opportunity for individuals and companies to negotiate a settlement. The corporation has made it clear that it is not a liquidator type asset management company, but one that wants to help keep businesses going where possible, that save jobs and contribute to the economy in general.

“AMCON acquired over 12,500 banking sector NPLs worth N1.645 trillion (Discounted Value of $10.6 billion) within set deadlines. AMCON purchased over 95 per cent of NPLs in the industry with banking sector NPLs at less than five per cent. It also restructured N600 billion ($3.85 billion) of NPLs acquired in 2011,” the document added.

The corporation currently own three banks, Keystone Bank, Enterprise Bank and Mainstreet Bank, which it had acquired through a ‘bridging’ process at a total cost of N765.3 billion and prevented them from liquidation. AMCON also appointed financial advisers to provide advisory services towards determining its strategic exit from the banks.

It added: “AMCON prevented a systemic crisis in the financial services industry and the liquidation and collapse of several banks. AMCON improved banks balance sheets so banks can focus on lending to the real economy and support economic growth; prevented a run on customers deposit, prevented job losses and restored confidence in the financial services industry

“AMCON’s intervention also led to the takeover of about $1billion NPLs from Nigerian banks owed by major Nigerian airlines. AMCON undertook a series of restructuring initiatives for these airlines and has supported all the airlines taken over with working capital which contributed to keeping them afloat following the take-over.

“AMCON is closely monitoring their activities to ensure proper stabilisation, management and repositioning for future success,” the document revealed.
Source: ThisDayLive

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