The mandatory Asset Management Corporation (AMCON) levy has become an ache in the ears for banks as it balloons their operating expenses, validating calls from analysts that the corporation has overstayed its welcome.
For instance, the charge makes up 30 percent of other operating expenses of lenders who would have been posting larger profits and giving bigger dividends to their shareholders had the levy never existed.
The largest banks collectively incurred N314.05 billion in AMCON charge in the first six months of 2023, which is 24.15 percent higher than 2022’s N253.24 billion, according to data compiled by MoneyCentral.
A levy of N57.35 billion was slapped on Zenith Bank; Access Bank, (N68.08 billion); United Bank for Africa, (N40.91 billion); First Bank of Nigeria (N62.11 billion); Guaranty Trust Holdings Company, (N27.43 billion), Fidelity Bank, (N23.07 billion); Stanbic IBTC Holdings Plc, (N15.38 billion), and First City Monument Bank, (N10.53 billion).
The Asset Management Corporation of Nigeria (AMCON) was created for the purpose of efficiently resolving the Non-Performing Loan (NPL) assets of Nigerian banks and other related matters. By the AMCON Act 2010 enacted by the National Assembly of the Federal Republic of Nigeria, the corporation is empowered to dispose of managed assets of Nigerian banks.
Analysts at CSL Research have said that they believe the winding up of the corporation would be a relief to the lenders. This is coming on a statement made by the Minister for Finance and Coordinating Minister of the Economy that the Federal Government was working towards ensuring that the Asset Management Corporation of Nigeria (AMCON) is wound up as soon as possible.
“As initially conceived, AMCON was not to remain in perpetuity but was to exist for only 10 years. However, the in- ability to recover loans bought has led to an extension of the tenor of existence of the corporation,” said Edun.
Some analysts have said that it is unfair to force banks to bailout corporations whose debacle is not their making or fault and that the levy is an unnecessary liability.
It is important to note that shareholders had bemoaned the negative impact of the charges on banks bottom line (profit) as they were of the opinion such savings would help the bolster banks profit and capital.
“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,” said Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria (PSAN).
“AMCON expenses have affected shareholders’ return on investment and it is a national fraud. We call on the new government to shutdown AMCON operations. The NDIC levy is also affecting banks compared to what is happening in other countries. The new government has to look at it because shareholders have suffered a lot from AMCON and NDIC expenses,” said Okezie.