AMOCON amendment bill: CBN, NDIC, banks endorse; SEC picks holes

By The Rainbow

The  Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and  the Bankers Committee on Monday expressed support for a bill seeking to amend the Asset Management Corporation of Nigeria (AMCON) Act and enhance its capacity to secure ailing banks.

The Securities and Exchange Commission, however, has reservations about the overriding powers entrusted in AMCON under the bill.

CBN's position was conveyed by the Director, Risk Management, CBN, Mrs. Folakemi Fatogbe

Fatogbe said that the bank was ready  to continue to groom AMCON to perform its functions.

NDIC and the commercial banks also endorsed the bill and expressed their willingness to provide additional support to the sustenance of AMCON..

. But the Securities and Exchange Commission (SEC) kicked against section 60(c) of the proposed amendment to the bill, which seeks to exempt AMCON from complying with the provisions of the Investment and Securities Act (ISA) 2007.

SEC, represented by its Executive Commissioner, Legal and Enforcement, Hajia Saadatu Mohammed Bello, submitted that AMCON should comply with the ISA 2007 with respect to capital market matters, because non-compliance would mean the corporation's power superseding the nation's constitution. The proposed legislation  seeks to amend  a total of seven  sections of the law  to  strengthen AMCON as an institution to be able to efficiently carry out its functions.

SEC particularly kicked against the provision in the bill that tends to exempt AMCON from paying fees to SEC in line with the Investments and Securities Act. It is estimated that it would cost AMCON about N20 billion if it should comply with the demands of the SEC. The Chairman, House Committee on Banking and Currency, Hon. Jones Onyereri, said the amendments were fundamental to the banking sector and would require the  setting up of a Sinking Fund or Resolution Cost Fund.

Under the proposed law, he said,  a  bank would be required  to contribute annually an amount equivalent to 50 basis points of its total assets to the Fund while the  CBN would  contribute N50 billion to the fund.

According to him,  the proposed amendments had already been agreed to and embodied in a written agreement between CBN and the commercial banks.

He explained that the bill  seeks to  codify the obligations of both the CBN and the banks and to give the previous agreement between parties the force of law.

'The Resolution Cost Fund is a safety net for AMCON to ensure it meets its obligations arising from debt securities issued by it.

'It insulates the tax-payer from obligations occasioned by financial mismanagement by the banks. 'The bill provides for a Board of Trustees to oversee its supervision, administration and management of the Fund. 'The bill further seeks to remove contradictions relating to the purchase agreements between AMCON and eligible financial institutions, especially as they relate to legal impediments to acquiring assets that are sub-judice,' Onyereri said.

Speaker of the House, Hon. Aminu Tambuwal, who declared the public hearing open, described AMCON as  a child of necessity, borne out of the need to cushion the public against future shocks in the  banking system.

The House, Tambuwal said,  would continue  to pass the kind of laws that will engender the efficient management of the  nation’s economy.

'We must continue to plug the loopholes that encourage waste and the misappropriation of public funds for private gain. As elected representatives of the people, our first duty is to protect the welfare of members of the Nigerian public.'