Nigerian Banks increased their contributions towards the AMCON sinking Fund to about N167 billion in 2019 compared to about N154,9 billion a year earlier. This is according to data compiled by Nairametics Research.
All banks operating in Nigeria contribute 0.5% of their total assets as at the dates of their audited financial statements as levies to the Banking Sector Resolution Cost Trust Fund (BSRCTF), also known as the AMCON Sinking Fund, to repay AMCON’s debt to the Central Bank of Nigeria (CBN).
According to the data banks in our universe of data that we track have contributed a combined N455.9 billion in the last 3 years alone. Financial services conglomerate, FBNH has contributed the most with about N107.4 billion in the last 3 years. Zenith Bank is next with about N82.7 billion.
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Source: Nairametrics Research.
What it means: The AMCON’s sinking fund was established following the realization that recoveries from AMCON-acquired bad loans might be insufficient to meet the cost of restoring financial stability. The fund is to further ensure that the burden on the national treasury is reduced, as any banking crisis will be resolved by banks, CBN and AMCON.
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Meanwhile, the increase in levies is in tandem with the growth of the banks’ total assets. For instance, the total annual assets of banks in the last five years were N27.37 trillion in 2015, N32.02 trillion in 2016, N35.77 trillion in 2017, N41.04 trillion in 2018 and N47.27 trillion in 2019, based on data compiled by Nairametrics Research.
While some industry watchers believe that AMCON’s existence will be longer than expected, considering the crisis that rocked the industry from inception, some shareholders told Nairametrics that such tenure elongation is not a welcome development for them.
National President, Constance Shareholders’ Association of Nigeria, Shehu Mikail, explained that the contributions made by the banks are huge and if care is not taken, it could deplete banks profit and returns on investments (ROI).
He said, “The contributions being made by banks into the sinking fund is to the detriment of their shareholders. The act that established AMCON needs to be reviewed and the agency should give details of its services to the nation.
“We do believe that all other regulatory agencies are up to the task of enforcing the necessary rules to sustain the financial sector but this is not, as it causes more injury to shareholders in terms of dividend payment.”
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Another shareholder, Taiwo Oderinde alleged that AMCON was designed to suppress investment in Nigeria, as all shareholders’ investments in the collapsed banks have gone down the drain. He said,
“Banks must have paid about N1trillion to AMCON in the last 10 years of its existence despite the fact that some financial institutions were nationalized without giving their shareholders anything. It was an emergency toxic vehicle established by the government through the CBN and stakeholders then to save the situation at hand, but it has overstayed its welcome.
“The only way forward is for AMCON to start winding down its operations because it has spent 10 years; it can use 2020 for rounding off. We call on the legislators to look into the tenure extension. The government needs to evaluate the performance of AMCON since inception, noting that the impact of the corporation is not felt.”
