Nigerian Banks and their shareholders who thought they could finally escape from billions of naira they had been paying to bad bank AMCON after its expected sunset in 2023, have been hit with a new levy to support a new Bridge Bank.
The Bridge Bank is part of an amended banks and other financial institutions bill signed into law last week by Nigerian President Muhammadu Buhari that seeks to improve loan recovery and the overall resilience of the country’s financial system.
The Central Bank of Nigeria (CBN) will inject N10 billion ($26 million), or an amount that still needs to be determined by its board, into the so-called resolution fund every year, according to the amended banking laws signed by Buhari.
Each bank will make annual contributions equivalent to 0.1 percent of their total assets, or a percentage that the CBN still has to finalize.
The new rule is separate from the Assets Management Corp. of Nigeria, or AMCON levy.
The AMCON charge is equivalent to 0.5 percent of total assets. Banks are increasingly paying a bigger part of their revenues into the AMCON fund as total assets increase.
For instance, Nigeria’s largest bank by assets, Access Banks total assets increased by 8.6 percent to N7.76 trillion in June 2020 from N7.14 trillion in December 2019.
Among Access’ operating expenses AMCON surcharge however increased by 56 percent to N35.4 billion, as total assets increased following the merger with Diamond Bank.
AMCON was created to buy bad debts following a banking crisis in 2009, according to the amended laws. AMCON is expected to wind down by 2023.
In 2018, Skye Bank Plc collapsed and the central bank established Polaris Bank, a bridge bank to take over its assets and liabilities.