'At loggerheads' Shareholders, experts clash over N327.6bn levy by AMCON from GTBank, eight others in 2 years

Key stakeholders in the capital market and shareholders in publicly quoted banks and other financial institutions are currently at loggerheads over the continued existence of the Assets Management Corporation of Nigeria (AMCON) on the backdrop of the huge levy it impose on Nigerian banks.

This is coming on the heels of corporation raking N327.6billion from nine banks between 2020 and 2021 financial year ended December 31.

According to reports retrieved by Freelanews, bank result and accounts revealed that AMCON levy imposed on nine banks moved from N146.9billion in 2020 to N180.67billion in 2021 financial year.

The nine banks are Access bank Plc, Guaranty Trust Holding Company Plc (GTCO), United Bank for Africa (UBA), Zenith Bank Plc and Fidelity Bank Plc.

Others are Wema Bank Plc, Sterling Bank Plc, FCMB Group Plc and Stanbic IBTC Holdings Plc.

The corporation charges 0.5 per cent of banks’ total assets on and off balance sheet items. The levy is a statutory charge imposed by the Central Bank of Nigeria (CBN) on all banks operating in Nigeria.

The CBN, pursuant to Section 9(c) of the AMCON (Amended) Act 2015, had informed the banks of the shortfall in its contributions to the Banking Sector Resolution Cost Sinking Fund for 2016 and 2017.

Rising bad loans and the need to save the banking industry from imminent collapse prompted the federal government to set up the AMCON in 2010 with a 10-year mandate.

The AMCON Act 2019 (as amended) grants the corporation more powers to recover bad debts from obligors.

In an analysis of the nine banks’ audited results showed that Access Bank alone in the last two-year paid N76.9 billion to AMCON as the bank’s total assets hits N11.73 trillion in 2021.

With N9.45 trillion in total assets, Zenith Bank’s sinking funds with the corporation accumulated to N68.9 billion between 2021 and 2020, while UBA accounted for N50.4 billion banking sector resolution cost in the last two years.

GTCO’s AMCON expenses amounted to N39.09 billion between 2021 and 2020 as the bank in 2021 paid N21.89 billion and N17.2 billion to AMCON in 2021 and 2020, respectively.

The Group Chief Executive Officer, GTCO, Segun Agbaje at the Holding company’s first Annual General Meeting (AGM) in Lagos, explained to shareholders that the corporation has come to stay

According to him, “I think AMCON was meant to operate for 10 years. As the balance sheet continues to grow, the AMCON levy will definitely grow as you have seen in our results.

“Our AMCON levy in 2021 went up by 27 per cent. It is like the more successful you are, the more your AMCON levy goes up and I am not sure that will go away soon.”

But the Chairman, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie disagrees stressing that the Corporation has over stayed its function in the banking sector.

He called on the banking sector to suspend funding AMCON as it is affecting shareholders’ profit.

According to him, “AMCON is lobbying the federal government to extend its operations. If the Central Bank of Nigeria wanted to sustain AMCON, fine but not banks funding the corporation. AMCON has overstayed its functions in the banking sector. AMCON is reporting losses despite collecting levy from banks and having challenges in selling recovered assets from debtors.

“The banking institution must continue to fund AMCON because it is not the bankers’ committee that form their board but the government. If the federal government wanted to keep the board of AMCON, they must think of funding it not collecting from banks.

“What was AMCON doing when some banks were having challenges recently? AMCON has not helped our banking sector and it has not posted any profit. I still do not understand why the Senate requested AMCON to continue to exist.

“AMCON’s 10 years has ended, according to the law but they continued to stay, playing games with shareholders’ funds. AMCON is killing the industry and not helping the banks when they are in financial crisis.”

In the same vein, the National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Dr. Anthony Omojola said since the corporation was established by CBN, shareholders fought against it and are still feeling the impact on returns to shareholders every year.

He said, “AMCON has been taking away shareholders’ funds freely because they are part of the regulators since they have CBN behind them.

“They explained to shareholders AMCON wanted to clear toxic debt and by now, they should have cleared those funds and let shareholders start benefitting tremendously from investing in listed banks on the Nigerian Exchange Limited.

“AMCON has outstayed its usefulness and the creation was not necessary in the first place. Besides, the toxic assets, who are those buying them from AMCON? Unfortunately, we Nigerians hate the truth and that is why you see the present state of the nation’s economy.”

Speaking from a different perspective, the Vice president of Highcap securities, Mr. David Adnori said the levy was an agreement between the CBN and the banking community.

He added, “When all the banks were having challenges in 2008, the idea of AMCON came up to absorb all the toxic assets. What was stopping shareholders from not complaining back then? What I think is that the shareholders complaining over the establishment of AMCON are ungrateful and a set of investors who cannot understand what AMCON has done to protect the banking sector from collapse. Perhaps, they could have been happier if all the banks had collapsed like Skye bank.”

The Managing Director and Chief Executive of AMCON, Ahmed Kuru, had said if the bank’s debt owed to the CBN is not fully repaid before the sunset date of 2023, banks will continue to pay into the fund which will then be with the CBN.

He had expressed that banks’ contribution to the sinking fund in recent years have been low and had not been able to pay out of its debt or enough to pay the interest.

According to the funding arrangement of the corporation, commercial banks are supposed to provide 70 per cent while AMCON operations was supposed to provide 30 per cent.

Kuru noted that the contribution of the banks was done on the basis of a growth rate of 20 per cent, however, the growth rate of commercial banks’ total assets have in recent years fallen below 10 per cent year on year.

Kuru, who is optimistic that AMCON operations would be wound over by 2023 or 2024 noted that the contributions of banks into the sinking fund will continue until the debt is fully repaid.

He added, “Indicating that the CBN may decide to increase the rate which banks pay he said “the loan is flexible, it allows CBN to increase the rate so it can continue to run even if you scale down AMCON’s operations. It can run for the next 20 to 30 years until the debt is paid.”