Citing what they say is the negative impact, the Asset Management Corporation of Nigeria (AMCON) charge is having on banks’ operating expenses, analysts at CSL Research have said that they believe the winding up of the corporation would be a relief to the lenders.
The analysts stated this while reacting to news reports, which said that the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, recently indicated that the Federal Government was working towards ensuring that the Asset Management Corporation of Nigeria (AMCON) is wound up as soon as possible.
According to the analysts, while AMCON was set up to buy the Non-Performing Loans (NPLs) of the country’s lenders with a view to stabilising the banking system, the statutory AMCON charge, over the years, has become a significant proportion of banks’ total operating expenses, “making up an average of 17.4 percent of operating expenses as of FY’22.”
The analysts said: “News reports citing the Finance and Coordinating Minister of the Economy Wale Edun say the federal government is working towards ensuring the Asset Management Corporation of Nigeria (AMCON) is wound down as soon as possible.
The minister, however, noted that the ability of the bad bank to be wound down after nearly thirteen years of operation would depend on its ability to offset its huge liabilities estimated at c.N3 trillion. “As initially conceived, AMCON was not to remain in perpetuity but was to exist for only 10 years. However, the in- ability to recover loans bought has led to an extension of the tenor of existence of the corporation.
