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Rescued Banks Intensify Debt Recovery Drive

By on April 7, 2011

Rescued banks in the country have intensified their debt recovery drive ahead of the June, 2011 recapitalisation deadline that has been fixed by the regulator.

Despite the activities of the Assets Management Corporation of Nigeria (AMCON), THISDAY learnt that most the banks have perfected strategies to ensure that the value of debts recovered increases significantly before the conclusion of the recapitalisation exercise.

As a result of that, dissatisfied with the performance of the debt recovery agents that had been engaged since last year, THISDAY gathered that some of the banks have terminated the contract they went into with the agents and have since replaced them with new ones.

The Governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, had said the apex bank would complete the process of recapitalising the eight rescued banks by the middle of the year. Currently, only two of the rescued banks: Union Bank of Nigeria Plc and Intercontinental Bank Plc have disclosed their recapitalisation plans.

According to a top official of one of the Debt Recovery agents, the new firms that were recently engaged by some of the banks were given a three-month mandate.

The official who pleaded anonymity said: “What the bank did was to enter into a debt recovery contract with 10 different agents and the compensation basically depends on what is recovered. We have a mandate to recover 50 per cent of the debt in three months time.

“But the challenge we are having is that some of the debtors have located from the residential address they gave to the bank and we also noticed that some of the debts had gone bad, even before the 2005 consolidation exercise.”

Managing Director and Chief Executive Officer, Mr. Mustapha Chike-Obi had since December last year when the non performing loans (NPLs) were acquired, the corporation was yet to commence debt recovery. The AMCON boss had said that the corporation intends to firstly look at all the loans on a case-by-case basis, talk to the debtors, and see if it can restructure the loans for the debtors.

He had explained that what the corporation did was to inform the banks that they should continue with recovery until AMCON takes control of the process directly. According to Chike-Obi, any recovery that comes in through that process will be welcomed.
source : Thisday