The Asset Management Corporation of Nigeria (AMCON), yesterday said it had recovered 57 per cent of the N5.6tn non-performing loans it acquired from the banking system five years ago.
This is approximately N3.2tn, excluding the interest element.
AMCON, the bad debt manager, which was established by the Federal Government in 2010 to rescue the nation’s banking industry from an imminent collapse, has been aggressively pursuing bank debtors over the years.
The Chief Executive Officer, AMCON, Mr. Mustafa Chike-Obi, told Bloomberg that the loan recovery efforts had led to the recovery of 57 per cent of the N5.6tn bad debts it acquired from the banks, shortly after the banking sector crisis of 2009.
“We’re a little bit behind, but not too far behind what we expected; the courts are a constraining factor. As much as we want to carry a hammer, we still have to go through the court system and remain an institution that obeys the laws; that takes time,” the AMCON managing director told Bloomberg.
The agency’s spokesman, Mr. Kayode Lambo, however, told our correspondent on Wednesday that the amount recovered excluded the interest element on the non-performing loans.
He could, however, not immediately give the details of the interest element. He promised to do this as soon as possible.
The state-owned agency has managed to collect or reorganise the debts it bought at a rate of 1.07 times for what it paid for them, above its 80 per cent target, Chike said.
Modelled on organisations including Ireland’s National Asset Management Agency Limited and Korea Asset Management Corporation, AMCON used bonds to bail out 10 banks and bought more than 12,000 loans from industries, including aviation, petroleum products’ marketing and manufacturing for about N1.8tn.
A clean-up of the industry means Nigerian banks are better able to withstand shocks even as non-performing loans rise following the latest oil slump, Chike-Obi said.
He added that it was unlikely that the banks would be offered another bailout.
“If the central bank, whose decision it is mostly, did ask us, we’d have to think very seriously about it. But there’s not much appetite from the central bank, AMCON or the nation for this. Nobody wants it,” the AMCON boss added.
While non-performing loans stood at 2.9 per cent at the end of December, they were rising, the Central Bank of Nigeria said in April. The ratio would climb to between five per cent and 10 per cent by the end of 2015, Fitch Ratings had predicted last year.
Chike-Obi, a former Goldman Sachs Group Inc. mortgage-backed bond trader, also wants to sell the last of AMCON’s bank holdings. It owns Keystone Bank Limited and has stakes in Unity Bank Plc and Wema Bank Plc.
Keystone, the biggest of three banks nationalised after the 2009 crisis, would probably be sold this year, he said. AMCON’s shares in Unity and Wema would be disposed of “as soon as is practical,” he added.
Based on the experience of selling Mainstreet Bank Limited and Enterprise Bank Limited last year to domestic investors, interest in the new offerings could be high, Chike-Obi said.
“The prices we got were much higher than we expected. There was a lot of international interest in both banks. In the end, the local banks were the highest bidders,” he added.
While the banks are now better-managed and more adept at gauging loan risks, they are “running into danger of over-regulation,” said Chike-Obi, without being specific.
The agency’s priority now is recovering the remaining bad loans it bought.
“No one should expect magic. We expected it to be difficult and it remains difficult,” Chike-Obi noted.
