The former Managing Director of Assets Management Corporation of Nigeria, Mustapha Chike-Obi, has said the corporation was no longer useful in the banking industry.
This was disclosed recently by Chike-Obi in his speech at the BusinessDay Policy Intervention Series with a focus on the banking sector recapitalisation.
Chike-Obi explained that AMCON was no longer necessary and was constituting a major source of expenses on banks’ books, according to The Punch.
Chike-Obi said, “AMCON was created for an emergency that would have dragged down the banking sector. Without AMCON, the banking system would have collapsed. It was necessary at the time. It is not necessary today and it will not be necessary in the future. AMCON is the longest-running asset corporation in the world. Debts that you have not recovered in 13 years, the chances of recovering them are very slim.
“Today’s second highest expense for banks are the statutory levies, AMCON and NDIC. It will catch up with salaries and expenses in the next two or three years as the highest item. It is very high. Now, you ask yourself, why do we pay NDIC premium when at least the last four bank failures, AMCON bails out the banks at no cost to NDIC?
“I would think that NDIC premiums should be given to AMCON until it is extinguished or when a bank fails, NDIC pays as much as it can and AMCON takes up the balance but as long as AMCON is performing that insurance role for deposits, I don’t see the reason for the duplication of the AMCON and NDIC in terms of collections.”
According to Chike-Obi, who is the chairman of the Bank Directors’ Association of Nigeria, the reason banks don’t do as well as they can is because they’re paying a lot of taxes.
“I think Fidelity Bank and we are tier 2, according to (the Managing Director of Afrinvest West Africa, who was the keynote address at the event) Dr. Chioke Ike, we are going to pay about N50bn for AMCON and NDIC fees this year. The bigger banks are going to pay more. It is not trivial.
“We would not be like banks in Indonesia or Brazil that don’t pay AMCON and NDIC fees to the magnitude that we pay them. Those are things dragging the banking industry,” he explained.
The statutory contribution made by nine banks to AMCON increased by 25.81 per cent to N306.06bn from N243.28bn in the previous year, according to the analysis of the annual reports of the banking groups filed with the Nigerian Exchange Group for 2023.
The banks analysed included FBN Holdings, Access Holdings, Zenith Bank, United Bank for Africa, Stanbic IBTC Holdings, FCMB Group, Guaranty Trust Holding Company, Fidelity Bank, and Wema Bank.
AMCON’s contributory cost relates to the contribution towards the fund set up by the Central Bank of Nigeria for the bailout of the banking sector.
The members of the Senate Committee on Banking, Insurance, and Other Financial Institutions, had in December called for the dissolution of AMCON over the failure to recover N5tn liabilities.
