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Experts fault AMCON’s ‘name and shame’ strategy



Asset Management Company of Nigeria’s (AMCON) plan to name and shame Politically Exposed Persons (PEPs) is predicted to come to naught as financial analysts contend that that similar actions embarked upon by the Central Bank of Nigeria (CBN) and deposit money banks (DMB’s)in 2015 did not yield the expected results.

AMCON earlier in the month threatened to publish to the names of PEPs, who form the bulk of the 350 persons who owe the bad bank about N4trillion. However, previous attempts by commercial banks to employ a similar tactic failed.

Last week, a Federal High Court sitting in Lagos ordered AMCON  to pay BolanleBabalakin, chairman, Bi-Courtney Group of Companies, N3 billion for publishing his name as a debtor in 2016.

AMCON’s plan to name and shame its debtors won’t yield any significant result, because it has tried it in the past and it didn’t work, noted Barrister Chibuike Allison, Company Secretary, Kajola Integrated Investment Plc.  He advised the corporation to adopt the alternative dispute resolution option, with which he believes it can make better headway.

“We have gone through this cycle before. When AMCON was very young, one of the things it did was to publish the names of chronic debtors. I don’t think it had any material effect in making people pay their debts,” claimed Johnson Chukwu, Managing Director, Cowry Asset Management Ltd in a telephone interview with Business Hallmark.

He urged AMCON to go for more effective means of recovery its debts, adding that naming and shaming individuals whose loans have gone bad would not change their fortunes. “They may not have the capacity to pay back their loans. And if they have the capacity to pay, AMCON should foreclose on those assets and explore the legal system for asset recovery,” Chukwusaid.

Meanwhile, shareholders of banks have clamoured for the winding down of AMCON (‘bad Bank’) at the expiration of its 10 year mandate, because the 0.5 per cent of their total assets that commercial lenders pay as charges to AMCON has eaten into dividends.

AMCON was created in 2010 as a special vehicle to mop up toxic assets from commercial lenders, when the banking industry was grappling with high non-performing loans (NPLs). The bad bank acquired Eligible Bank Assets (EBAs)worthN1.7 trillion.

The top 5 Eligible Financial Institutions (EFIs) have 58.18 per cent of all delinquent loans it has so far purchased.

Defunct Intercontinental Bank has the largest toxic asset in AMCON’s portfolio, a total of 1,735 loans amounting to 14.62 per cent of the corporation’s total portfolio. This is followed by defunct Oceanic Bank and Union Bank, which formed 11.58 per cent and 11.43 per cent of its portfolio.

The Cowry Asset boss argued is unwise to wind down AMCON with over N5 trillion toxic assets still in its portfolio. “To wind it down, you have to find means of absolve those liabilities. We have wait for the economy to improve, so that the quality of assets as collaterals that AMCON is holding would appreciate, so that there will also be market for those collaterals,” he stated.

Attempt to reach AMCON’s spokesperson, Jude Nwauzor were unsuccessful as he did not pick his calls when our correspondent called him three times, neither did he respond to the text message spent to him.

Ahmed Kuru, AMCON’s Chief Executive Officer while presenting the corporation’s 2017 financial statement disclosed that the name and shame strategy was meant deal decisively with the top obligors. According to him, only 350 chronic debtors account for almost 80 per cent of AMCON’s  over N5 trillion toxic assets.

He further explained that corporation is currently restructuring its operational processes in order to pursue unrepentant debtors with renewed vigour.  “I think people need to pity us because we are at that stage in the life of the Corporation where we are dealing with the hardcore because the low hanging fruits have been dealt with earlier in the life of AMCON.

“I want you to understand that we are sitting on a substantial amount of assets, which we must one way or the other resolve on or before our sunset, which is around 2023/24,’’Kuru maintained.

The corporation recovered about N740 billion of its debts last year. And it has so far recovered 35 per cent of the total debts in its portfolio.

AMCON has confiscated the assets of highly placed Nigerians, who are indebted to it, in recent times. IN May 2018, it seized Sea Petroleum Oil & Gas Ltd. and other assets belonging to Senator Stella Oduah-Ogiemwonyi over about N20billiondebt.

The corporation also took over the assets of Silverbird Galleria Limited, Silverbird Promotions Limited, and Silverbird Showtime Limited, all belonging to Senator Ben Murray-Bruce over N11 billion debts.