News Column

Amcon Assures Nigerian Banks Over Loan Repayment Period

June 10, 2014

AMCON spokesperson, Kayode Lambo, gave the assurance during an interactive session with journalists in Lagos.

The Asset Management Company of Nigeria, AMCON, on Tuesday reassured banks under its debt recovery administration that contributions to the sinking fund would not go beyond the repayment period of their loans.

AMCON spokesperson, Kayode Lambo, gave the assurance during an interactive session with journalists in Lagos.

Some shareholders have repeatedly claimed that commercial banks' contributions to the sinking fund had eroded their dividend.

The sinking fund was set up to assist AMCON meet its goals and also ensure that government will not bear the cost of financial crisis.

Under the sinking fund arrangement, each bank contributes 0.5 per cent of its total asset and another 0.5 per cent of 33 per cent of their off balance sheet items to the sinking fund.

Mr. Lambo said that banks would not contribute to the sinking fund beyond the 10 years when AMCON assignment would have been completed.

He said that the loan (bond) was used to rescue the banks during the financial crisis that affected the financial industry in 2008.

"Contributing to the sinking fund stops immediately the loans are paid back.

"The plan is that in 10 years, we believe that everything would have been resolved," said Mr. Lambo

He said that AMCON had already retired N1trillion in 2013 out of the N3.8trillion it owed, while it expected to redeem N800 billion in 2014.

On the divestment from the bridge banks, Mr. Lambo said that the corporation decided to start with Enterprise Bank and Mainstreet Bank, stressing that Keystone would be sold last.

NAN reports that bridge banks are the temporary arrangement by Central Bank of Nigeria and Nigeria Deposit Insurance Corporation to administer deposits and liabilities of some troubled banks.

The three bridge banks are Enterprise Bank, which took over Spring Bank Plc, Keystone Bank, which took-over Bank PHB Plc, while Mainstreet Bank took over Afribank Plc.

Citigroup Global Markets Ltd. and Vetiva Capital Management Ltd. were appointed as the financial and legal advisers for the sale of Enterprise Bank.

AMCON had put Enterprise Bank up for sale last year and had attracted 18 bidders including foreign and local investors, while the same process is on-going for Mainstreet Bank.

"AMCON will complete with the divestment of Enterprise and Mainstreet Banks and then start with Keystone Bank," he said


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Source: AllAfrica

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