The Asset Management Corporation of Nigeria (AMCON) may introduce the “real-estate investment scheme” by the end of the year to raise money to meet its bond repayments, its Chief Executive Officer Ahmed Kuru has said.
Kuru told Bloomberg that the agency plans to sell the properties when the economy improves and the assets can attract fair value, he stated.
The agency was set up six years ago to take on bad debts and rescue the nation’s banking industry from collapse. Leasing out properties seized from companies that are failing to repay loans will enable it address cash crunch affecting its operation.
The agency is confiscating more assets than it is receiving from its recovery efforts as businesses battle to sell products and generate cash, Kuru said. Companies that owe AMCON are struggling to meet their debts as Athe nation’s economy heads for a recession because of a slump in crude prices and a 15-month currency peg to the dollar that crippled foreign exchange (forex) supplies.
AMCON has no plans for another rescue package for banks and is focused on how it will repay N5.2 trillion ($16.5 billion) of outstanding bonds over the next nine years, he said. The agency purchased about 14,000 non-performing loans at a cost of N3.9 trillion in a government-led bailout of 10 companies following the 2009 banking crisis.
A levy that sees banks paying 0.5 per cent of their assets annually, generates as much as N190 billion for AMCON and is helping the agency fill funding gaps, Kuru said. The shortfall widens as the downturn in the economy causes the price of assets to fall below their book value, making sales difficult, Kuru said.
“We are in the second phase, which is redemption of our debts, not bailing out banks. We are not in the perpetual business of bailing out banks,’’ Kuru said.
Nigerian regulators last month replaced the management and board of Skye Bank Plc and provided the nation’s 10th-largest lender with a loan to bolster capital levels that had dropped below requirements. There are “a few” lenders that are probably not meeting prudential ratios in terms of liquidity, or bad loans or capital, Tokunbo Martins, the Central Bank of Nigeria’s director of banking supervision, said last month.
The sale of Keystone Bank Limited., the biggest of three banks nationalised after the 2009 banking crisis, is in the “final stage” and it would probably be sold this quarter, Kuru said. Sterling Bank Plc said last month it withdrew a bid to buy the lender, which has assets of 318 billion naira and two international units, over price negotiations.
“Our activity here is directly linked to the economy. The combination of the economy picking up for the banks and also for the obligors’’ will help AMCON meet its objectives and wind down in 2023 as planned, he said.
The Nigerian Stock Exchange Banking Index, which measures among the country’s 10 biggest lenders, fell 0.1 percent on Tuesday to pare gains this year to eight percent. The naira has weakened 37 percent against the dollar since it started trading freely on June 20.
