While the banks are seemingly already burdened by a rash of regulatory induced costs or charges, there are indications that the authorities through the Assets Management Corporation of Nigeria, may be planning to place fresh burdens upon them with AMCON charges in line to be increased sooner than later.
Notice of the move to proceed with an upward adjustment of AMCON charges was recently muted by the Director General of the Budget Office of Nigeria, Dr. Ben Akabueze.
Akabueze who seemed to be expressing a personal opinion at that time had revealed that reports suggested that out of over N5trillion toxic assets, AMCON had only recovered N1.6 trillion through the Economic and Financial Crimes Commission (EFCC) between 2017 and July 5, 2021.
The DG Budget said it was becoming a huge concern that the recovery of these assets was taking too long aside from the fear that it constituted to a potential loss of tax payers money.
This has however generated fears among deposit money banks as AMCON charges already account for about 30 per cent of financial institutions expenses.
In his words at that point, Akabueze had volunteered:
“There are debates and discussions over whether AMCON overpaid for the assets or not given how toxic they were. Yes, this is a matter of serious concern to us on the fiscal side, because if AMCON does not work down these assets and pay down that all of us have to pay.
“By design, the resources to work down the obligations would partly come from contributions from the banks and I think that AMCON should at this point consider raising the level of contributions that the banks make, even on a risk asset-weighted basis, so that banks that contributed significantly to the pool of assets…’’
Akabueze opined that the right time to task banks to repay those toxic loans was now that they seem to be making huge profits.
‘’Banks that are making mouth- watering profits nowadays should be made to contribute more significantly to working down these assets. It does not look equitable that banks will dump their toxic assets on AMCON which will now become a public burden and now they are declaring great profits and declaring dividends for their shareholders’’.
On the contrary however, the banks seem to be groaning under the weight of AMCON and NDIC charges which the claim eats deep into their profits.
Along this line, the Group Managing Director, GTCO, Mr. Segun Agbaje had told journalists a few months ago that AMCON charges was becoming a challenge to the financial institutions especially as it had to do with eating into their profits.
Agbaje revealed that GTCO’s effort to pay those charges as quickly as possible was constituting some sort of discomfort to the entity.
BH independent findings show that AMCON bank charges increased by 29.5 per cent from N97.18billion in 2020 to N129.9 per cent in 2021.
The findings reveal that twelve banks have been mostly affected by the charges. These banks include Access Bank, Fidelity Bank, GTCO, Stanbic IBTC, Sterling Bank, UBA, Union Bank and Unity Bank. Analysts have also observed that the increase in AMCON charges was a result of the impressive rise in the total assets of banks. For instance, in the first quarter of 2022, the aggregate total assets increased by 5.29 per cent to N61.23trillion.
Recall that banks are required to contribute 0.5 per cent of their total assets plus 0.5 per cent of all contingent assets as of the preceding year-end to AMCON’s sinking fund according to the existing regulatory guidelines. The regulations outline that the contributions are for a period of 10 years from 2013 and that it is non-refundable.
Reports reveal that about twelve banks have paid over N1trillion to AMCON between January 2017 and March 2022.
The bank’s books show that the heaviest contributors include First Bank which has paid N29.1billion in the first quarter of 2022, representing an 89.6 increase compared to the N15.33billion it paid in the previous year.
Access Bank has also paid N26.69billion to AMCON, representing an increase of 26.8 per cent from N21.04billion paid in Q1, 2021.
Zenith Bank has also coughed out N21.4billion to AMCON, representing 12.8 per cent higher than the N18.96billion in the previous year. At the same time, Zenith Bank seems to have paid about N151.63billion in AMCON charges in the past five years.
On their part, GTCO and Stanbic IBTC paid N11.64billion and N8.71billion respectively in Q2, 2022.
Recall that AMCON was established in 2010 to soak up all the Non-performing loans (NPLs) of the Nigerian banks to help stabilize the banking system and prevent it from collapsing.