AMCON EARMARKS N500BN TO SOAK UP BAD BANKS' LOANS
ABUJA - Asset Management Company of Nigeria, AMCON, said yesterday it was set to start the second round of non-performing loan purchases from the banking sector and was on track to soak up all bad credit by the end of next month.
AMCON was set up last year to absorb bad bank loans in exchange for government bonds in order to rebuild lenders' balance sheets after a $4 billion bailout in 2009.
AMCON issued three-year zero-coupon bonds with a face value of N1.03 trillion to 21 lenders in December in exchange for non-performing loans (NPLs), paying out a discounted total of N770 billion, in the first round of the purchases.
It is now set to soak up remaining bad loans of N20 million ($130,500) and above by March 31. It has said it plans to issue a further N500 billion in bonds to complete this.
'We are sending out notices tomorrow in which we would invite the healthy banks to submit non-performing loans with a face value of N20 million (and above),' chief executive, Mustapha Chike-Obi, said in a telephone interview.
He said AMCON was on track to recapitalise the nine lenders rescued in the 2009 bailout by the end of June, as planned.
'I have two hard deadlines… the end of first quarter for taking out all the NPLs and the end of second quarter for recapitalising the banks,' he said.
Chike-Obi said AMCON had received all necessary regulatory approvals to issue fully tradeable bonds by the end of March.
The bonds it has issued so far have been consideration bonds pending the approvals and will now be converted to listed debt.