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Tuesday, March 28, 2023

Stanbic IBTC Embroiled in N5.7bn Bad Debt Litigation Against AMCON

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The Federal High Court, Lagos Division is set to rule next month on a Counter-Claim filed against the Asset Management Corporation of Nigeria (AMCON) by Stanbic IBTC Bank regarding the claw back of bad loan assets worth N5.7 billion.

The case has been adjourned to 23 November 2021 for settlement of issues, according to information seen by MoneyCentral.

Stanbic IBTC Bank had in December 2012 entered into an agreement with AMCON to purchase the Eligible Assets (non-performing loan) of a client, which the Bank had classified as “doubtful”.

AMCON confirmed its willingness to purchase the proposed Eligible Assets at a total consideration of about N10 billion, which sale/purchase was concluded in December of 2012.

As a precondition for the sale, AMCON unequivocally stated that the pricing of the Eligible Bank Assets was subject to adjustment within twelve (12) months in line with AMCON guidelines after due diligence on information the Bank had supplied to AMCON.

AMCON by a letter dated October 4, 2017 informed the Bank of its intention to reprice the loan and claw back the sum of N5.7bn, being what was alleged to be excess overpaid consideration, as a result of what was felt was an overvaluation.

Stanbic IBTC in its response to the allegation, emphatically denied the allegations and said it provided evidence to AMCON to the contrary.

The Bank noted that AMCON’s attempt to reprice the sold Assets, were outside the 12-month claw-back period provided in AMCON’s guidelines.

“Notwithstanding all the clarifications made by the Bank, AMCON proceeded to apply to the Central Bank of Nigeria (CBN) to debit the Bank’s account with the sum requested to be clawed back, plus possible accrued interest,” Stanbic IBTC said.

Sequel to this, the CBN wrote to Stanbic IBTC on 31 July 2019, informing the Bank of AMCON’s request to debit the Bank’s account.

Accordingly, the Bank instructed its lawyers to institute a Legal action against AMCON, pursuant to which it obtained an interim injunction (ex-parte), restraining AMCON and the CBN from debiting its Account for the alleged claw-back sum.

The Stanbic IBTC Group litigation portfolio as at 30 September 2021 consisted of 368 cases and aggregate value of monetary claims against the Stanbic IBTC Group was N117.72 billion, $1.912 million and GB £74,284.64.

AMCON was established on the 19th July 2010, when the President of the Federal Republic of Nigeria signed the AMCON Act into Law.

AMCON was created to be a key stabilizing and re-vitalizing tool aimed at reviving the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy.

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