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AMCON to sell rescued banks

AMCON to sell rescued banks

Keystone, Enterprise and Mainstreet banks, were totally restructured after a CBN audit showed their poor financial standing. The Asset Management Company of Nigeria , AMCON, has said it would be selling off, Keystone , Enterprise and Mainstreet banks , in 2014.

The three banks, formerly known as Bank PHB, Spring Bank, and AfriBank were among the banks with infractions after the Central Bank’s
audit in 2009. Their situations were beyond mere bailouts and they had to be totally restructured, refunded and nationalised, to save depositors funds. The Head of Corporate Communications at AMCON, Kayode Lambo, who made this known, stated that the banks are quite stable. “The three banks are doing well and are back into profits,” he said. “We would be selling off the three nationalised banks second quarter
2014.”“We want to make sure we get our money back,” he added. The Asset Management Company, otherwise referred to as the nation’s bad bank, was setup to revive and stabilise Nigeria’s banking industry through the purchase of Non-Performing Loans, NPLs, of the nation’s banking industry.

The 2009 banking crisis in the country, which coincided with the global asset bubble, was huge, when compared to previous industry crises, according to finance experts. The crisis of solvency liquidity and confidence affected approximately 40 per cent of the total banking system. Financial firm’s reports reveal the financial cost of the intervention is now in excess of N5trn, aside shareholder values
destroyed.
A Financial Derivatives Company report states that AMCON has so far acquired over 10,000 NPLs worth N3.5 trillion (US$20 billion). Before
its formation, NPLs ratio in the Nigerian banking industry was in excess of 35%. As of December 31, 2011 the NPL ratio had fallen to 5 per cent enabling the banks to focus on lending. In addition, AMCON injected fresh capital into eight Nigerian banks, five of which have entered into successful mergers.Mr. Lambo explained that contrary to speculations that the Corporation got funds from the government to stabilise the banks, it raised bonds to bail out these banks.

“We actually raised bonds in the market, to be able to perform our duties to these banks; it is not that AMCON got money from the Federal
Government. It is not Federal Government money. The bonds were guaranteed by the Federal Government. That is where the Government came in. Hence, we have to raise money and pay back the money we raised through the bonds,” he said. “The process has already started.” He added that the organisation would publish conditions under which interested person or group of people can begin to apply for them. Fate of workers
The fate of the workers in the three banks dangle on a lose rope as Mr. Lambo said the affected bank workers jobs rests largely on its
prospective owners of the banks. “When something is bought over, one does not have that manner of control, so we cannot dictate who they would retain or not. They may decide to retain the existing management and staff to a large extent, if they are satisfied with
their performances,” he said.
He, however, added that the Corporation would certainly not be pleased with huge industry lay- offs due to the banks’ sales; and some
conditions on staff welfare may be included in the conditions which would be highlighted for their prospective buyers to consider.
AMCON was initially conceptualized to be a bank to resolve the serious and grave situation of the banking industry and insulate the system
from those risks. According to FDC, a diversified financial institution, apart from the resolution of manifested risks and toxic asset roughly
estimated at N4 trillion, it was also considered an essential part of the institutional framework for preventing and developing early response to
isolated pockets of risks that could easily become contagious or viral.

AmarSim Associations Development Consultants

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