AMCON: The journey so far

The Asset Management Corporation of Nigeria (AMCON) was established under the AMCON Act 2010 to resolve the issue of non-performing loan assets in the banking sector.

AMCON, which was an offshoot of the Central Bank of Nigeria (CBN) banking sector intervention, has clearly defined objectives of buying up non-performing loans (NPLs) from the banks, re-capitalising them, and finding buyers to run them in a transparent manner.

It currently has over 12,000 bad loans in its portfolio and has continued to pursue the recovery of the debts. It has sold bonds worth over N4.7 trillion in the course of its operation. It is the largest financial institution in the country today, with assets valued at about N5 trillion.

Mustafa Chike-Obi was the pioneer managing director and chief executive until last two weeks when he was relieved of his post by the Federal Government. He is a mathematician who took after his father, the legendary Professor Chike Obi, once reputed to have solved a 150-year-old mathematical problem.

It is to Mustafa Chike-Obi’s credit that the banking crisis was resolved in a commendable manner with the lowest possible loss of depositors’ money and at no cost to the national treasury. Indeed, the laudable achievements of AMCON and the stabilisation of the banking sector could be largely credited to the careful consideration and steady implementation of its mandate by Chike-Obi.

Today, all the NPLs in the banking industry are below 5 percent, a feat that has engendered public interest in the industry. Also, the risk management of banks today is far better than it used to be. This is given the background that many of these loans were loans that had been deemed lost or irrecoverable by the banks.

It is on record that the recovery of NPLs everywhere in the world takes a very long time, with the best recovery rate seen so far being 57 percent achieved by the Malaysians. In the case of the United States of America, after the Resolution Trust Company of America bought loans from the SMEs, all those loans were transferred to Deposit Insurance Corporation after the five-year period and many of those loans still exist till today.

AMCON has restructured over 50 percent of NPLs it got in terms of value, with the implied recovery rate of the restructured loans at over a 100 percent.

During his screening for the AMCON job in 2010, Chike-Obi promised to stick to the three cardinal objectives of the corporation: acquiring the toxic loans, managing them, and disposing the acquired assets at a profit. So far, he has successfully kept to his promise and forestalled major crisis in the banking sector.

Out of the three banks – Enterprise, Mainstreet and Keystone Banks – acquired by AMCON, two have been sold to worthy buyers. AMCON has also restructured and recovered substantial percent of NPLs it acquired. In the process, the corporation has admirably balanced maximum recovery with minimum disruption of viable businesses, helping to save a lot of employees’ jobs.

AMCON under Chike-Obi can be said to have performed creditably well as there is no bank today that is burdened by NPLs. All the banks are fully capitalised up to regulatory standards and AMCON has ensured that the processes of doing all of these are at the minimum possible cost. That requires maximising recoveries, minimising expenses and maximising disposal of assets acquired.

Today, banks are strong, they can lend. The banks were able to lend to power industry. Planes are flying, economy is growing – AMCON has been a big part of it.

It is our hope that that the new management team – led by Ahmed Lawan Kuru (managing director), Kola Ayeye (executive director), Eberechukwu Uneze (executive director) and Aminu Ismail (executive director) – would consolidate on these achievements and take the corporation to the next level.