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AMCON has bought all non-performing loans —CBN

By on April 6, 2011

The Central Bank of Nigeria on Tuesday said that the Asset Management Corporation of Nigeria had bought all non-performing loans in the banking sector.

The Director, Banking Supervision, CBN, Mr. Sam Oni, said that the corporation had made tremendous progress in terms of purchasing the non-performing loans of the banks.

The News Agency of Nigeria quoted Oni as saying in Abuja, “The first round of the purchase of non-performing loans that was done was actually restricted to margin lending by intervened banks and NPLs of those intervened banks, but limiting the purchase of the loans that they bought from the non-intervened banks to only margin loans. They have now gone round to purchase all NPLs from all the banks.”

Oni added that the apex bank would target a total non-performing loan ratio of five per cent across the sector.

Oni said that the regulator would not allow bad loans to stack up again to more than five per cent of total loans across the banking industry.

Oni was also quoted as saying, “Our target is that the industry non-performing loan ratio should not exceed five per cent.”

Oni pointed out that before the advent of AMCON, the NPL ratio was about 50 per cent.

AMCON said last week that it had bought about N1tn non-performing loans of 22 rescued and non-rescued banks in the second phase of its rescue programme in the banking sector.

The Managing Director, AMCON, Mr. Mustafa Chike-Obi said that the corporation had also put plans in place to issue N1.7tn bonds at its completion board meeting in Abuja on Wednesday, noting that there would be a road show for investors in the Federal Capital Territory last week.

He said, “We have bought non-performing loans of 22 banks, worth approximately N1tn at face value, for about N600bn. We are going to issue at this point, a shelf-registration of N3tn, but we are going to issue about N1.7tn bonds on April 6.”

The Executive Director, Finance, AMCON, Mrs. Foluke Dosumu, said that AMCON had started a process to gauge investor’ interest for the sale of N30bn in bonds,

Dosunmu said at a presentation in Lagos that, “The bonds are part of AMCON’s Series 1 debt programme of N1.7tn to be issued on April 6. The book building is for price discovery for the entire series and will be concluded on April 5.”

Chike-Obi also said that the N30bn tranche was the only portion of the Series 1 bonds that was open to the public, saying that, “the amount was large enough to determine where the price of the bonds should be.”

Source : Punch