AMCON Reports $15 Bln Post-Tax Loss

AMCON reported a 2.37 trillion naira ($15 billion) loss after tax on Friday, nearly three years after it was set up to absorb the bad debts of banks in the aftermath of a financial crisis.

The new losses, which AMCON officials reported at a press conference in the commercial hub of Lagos, exposed the scale of financial devastation wrought by a 2009 banking crisis. That crisis nearly sank nine lenders until the central bank intervened with a $4 billion bail out fund to keep them afloat.

It was not clear how the losses would be financed. AMCON’s bonds are state-backed and the amount written off equals half of Nigeria’s annual budget.

The Asset Management Corporation of Nigeria (AMCON) was set up in 2010 to absorb the sector’s bad loans in the aftermath of the crisis. The bank said the largest part of the losses was a 2.1 trillion naira writedown of those loans.

Neither was it clear if the losses were expected, but banking sources said the value of the toxic assets had been continually eroded since it first took them on in early 2010.

AMCON also said it expects to conclude the privatisation of three banks it nationalised after the crisis, by mid-2014, which would bring in some money.

It said 85 billion naira worth of its bad loans had been recovered, adding that taking on those loans had prevented 4.7 trillion naira of direct losses to the banking sector, and some 10 trillion naira of indirect loses, from the financial collapse it managed to prevent.

It added that Nigerian banks had agreed to increase their collective contributions to a post-crisis “sinking fund” used to refinance the bank’s bad debts to 100 billion naira, up from the 60 billion naira they had already put in.

Source: Reuters