AMCON spent N1.7tn on non-performing loans — Chike-Obi

The Managing Director, Asset Management Corporation of Nigeria, Mr. Mustafa Chike-Obi, says AMCON has spent N1.7tn to buy non-performing loans of banks. He also talks about the race for the CBN governorship, in this interview with OYETUNJI ABIOYE

Employees of bridge banks are worried about who the eventual buyer of their banks will be. What is the progress report on the sale of the bridge banks?

I would advise the employees of any institution, bridge banks or otherwise, to focus on their jobs and how to make the bank or the institution a better place. I think that when employees start worrying about who may be the eventual owner of their institution, they are doing themselves and their institution a disservice. Their focus should be on performing their job as best as they can. It was very clear from day one that we stepped into these bridge banks for the purpose of saving depositors, saving employees and saving the banking system. That has happened.

Less than 10 per cent of the employees lost their jobs as opposed to 100 per cent if we had not stepped in. I believe that these set of employees owe us a depth of gratitude for stepping in and saving their jobs. And the way they can repay us is by working as best as they can. It was also clear that the banks would not be owned permanently by a publicly-owned institution, and it was a temporary measure and the transition to private hands where they belong.

I think we have 20 banks in Nigeria and 17 are run by private hands and I don’t think their employees are worried about who owns them. And I will tell you the employees of GTBank probably can’t tell who the owners are. So, I am not sympathetic towards an employee who shows a lazy attitude because he does not know who will end up owning him. His is to do his job as well as he can; and our job is to make sure we sell those banks or divest to those who know how to run banks and who will make those banks to grow faster and better than under public ownership. So, if people are unhappy because of an eventual divestment, they should have known that this is a short term ownership and that divestment was coming.

And to be frank with you, it has taken longer than we expected. We were hoping to have divested earlier than this.

So, when are we looking at now?

It is important to emphasise again and again that we are much more interested in making sure the process is proper, transparent and everybody has a chance than in speed. The same people that are complaining now would complain if we had done it very quickly; it would have then become somebody handed the bank to their friend or family or their relative. We are going to go through every step properly to make sure that this is a very transparent and fair process. And we are quite prepared to sacrifice time to ensure that, than to hurry up and create issues that will linger for years.

Right now, our best guess for the completion of the Enterprise Bank is sometime in the second quarter of this year.

 What is the capital of Union Bank in terms of the ownership structure?

Union Bank is owned largely by a group of private investors. AMCON is the second largest shareholder behind these investors. I think they own 65 per cent; AMCON owns about 21 per cent; and the legacy shareholders own about 15 per cent.

The Senate last week raised issues about the ineffective use of the N5.7tn raised by the corporation, calling for the probe of AMCON. What is your position on this?

Let me first of all say I commend the Senate for passing the Second Reading of the AMCON Amendment Act. That was the news item on that day. As in any Senate and as it should be in any Senate, there was a debate. Some members raised some issues. The issues, we can tell you, are either inaccurate or uninformed. And the Senate President wisely and properly directed the committee that oversees AMCON to get some of the answers to some of the issues raised by the senators. We are in the process of preparing a full-scale answer to all the issues raised.

First, I don’t believe the Senate called for a probe of AMCON. I think the Senate President asked the oversight committee to look into some of the issues raised by the senators. The first issue is about somebody giving AMCON N5.7tn. I never understand how senators or National Assembly people can say that. There is no way AMCON can get N5.7tn from the government without it passing through an appropriation in the National Assembly. No government agency has given AMCON N5.7tn.

AMCON has borrowed N5.7tn from the market with a Federal Government’s guarantee. Of that N5.7tn, over N3tn was used to return depositors’ monies to them. So, when people say AMCON has misused N5.7tn, N3tn was used to pay back depositors. I dare say many senators and many National Assembly people are among those who had money in the banks that if AMCON had not stepped in, they would have lost their deposits. Of the N2.7tn left, N1.7tn was used to buy non-performing loans. Of that N1.7tn, AMCON has so far recovered about 51 per cent, not the 15 per cent that was thrown out. And of the 51 per cent that has been recovered, AMCON has made a recovery rate of 103 per cent. So, AMCON has so far recovered more money than it put out for those loans than it has recovered till date. Our target still remains 80 per cent, which will be one of the highest recoveries in the world. And we know that as time goes by, it will become more difficult to recover.

As for the people saying that the big debtors are running around, of our top 20 loans that we acquired in terms of size, all but one have been restructured or settled.

We have 12,000 loans; it will take time for us to talk to every debtor and recover or restructure or even go to court because we are a lawful institution. We can only go through the court. The court cannot handle 12,000 cases in one year.

Additionally, those calling for anything faster than 50 per cent recovery so far (and I think 50 per cent is outstanding) should bear in mind that that will require having a huge organisation. AMCON currently has about 300 staff members. The problem you are going to have in having 1,000 employees so as to recover the loans quicker is that as you recover the loans, you are going to have to lay off those staff members. And laying off workers is a very traumatic and expensive experience. So, we have tried to maximise recoveries and minimise employees. And I think anybody who looks at the record of AMCON against any other institution in the world, will see that we stand out as an exceptional institution. And so, senators may ask questions but it is good to ask the questions after having the right information.

There are allegations about people misusing money?

AMCON’s operating cost till date is less than half of one per cent of its assets. This is a remarkable cost to asset ratio anywhere in the world. So, I thank the Senate for passing the amendment. I also respect the Senate’s right for a healthy debate and I thank the Senate President for asking the committee to ask us these questions. We will give them the answers and we believe the answers will make the Senate to be very proud of us and of course Nigeria.

What is really the recovery rate?

We spent N1.7tn in buying non-performing loans, we have recovered 51 per cent, which is N861.534bn.

There is the news making the round that you are among those being considered as the next CBN governor. What is your take on this?

I have read very many stories about this. I leave it in the realm of speculations. The names that have been speculated to be the next CBN governor are well over 20. I think that this is a serious appointment. And it is a Presidential prerogative and I think that we should leave the process to play itself out. While I realise that these speculations are normal, on this case, it has been on the excessive side.

What qualities must your ideal CBN governor possess?

I do think the next CBN governor should be extremely competent and one that loves Nigeria, and is willing to do the difficult thing; to move the Nigerian economy forward.
Source: Punchng