AMCON to Lease Seized Property to Plug Funding Gap

The Asset Management Corporation of Nigeria (AMCON) set up six years ago to take on bad debts and rescue the nation’s banking industry from collapse may lease out properties seized from companies that are failing to repay loans as it grapples with its own cash crunch.

The corporation 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 said in an interview with Bloomberg.

It plans to sell the properties when the economy improves and the assets can attract fair value, he said. The agency is confiscating more assets than its receiving from its recovery efforts as businesses battle to sell products and generate cash, Kuru said.

Companies that owe money to AMCON are struggling to meet their debts as Africa’s largest economy and one of its biggest oil producers heads for a recession because of a slump in crude prices and a 15-month currency peg to the dollar that crippled foreign-exchange 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 pay 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 added.

“We are in the second phase, which is redemption of our debts, not bailing out banks,” Kuru said. “We are not in the perpetual business of bailing out banks.’’ The sale of Keystone Bank Limited, the biggest of three banks nationalised after the 2009 crisis, is in the “final stage” and it will 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,” Kuru said. “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.