The Asset Management Corp. of Nigeria, set up by the West African nation to buy bad debts from banks, said it spent 5.6 trillion naira ($35.5 billion) last year to acquire non-performing loans.
Amcon, as the company is known, bought loans worth 4 trillion naira “with the acquisition costs at more than twice the initial estimates” accounting for the remaining expenditure, Chief Executive Officer Mustafa Chike-Obi told reporters today in Lagos, the commercial capital. It made a net loss of 2.4 trillion naira, while total assets amounted to 3.34 trillion naira, he said.
Its assets are made up mostly of purchased loans and investments in both listed and unlisted stocks as well as real estate, according to the full-year result posted today on Amcon’s website.
Africa’s top oil producer established Amcon in 2010 as part of measures to save its banking industry from collapse as lenders reeled from bad loans to stocks speculators and fuel importers following the global financial crisis in 2008. The Central Bank of Nigeria fired the chief executive officers of eight lenders and bailed them out with 620 billion naira.
Amcon sold bonds to fund the purchase of bad debts and took over three of the rescued banks after regulators deemed them unlikely to meet a recapitalization deadline. Lenders are required to contribute part of their earnings to a fund toward paying for the bonds.
Through its interventions 4.7 trillion naira of deposits in eight banks belonging to 18 million individuals, organizations and agencies were protected, according to the statement. Amcon “also prevented a contagion in Nigeria’s banking system” that would have put 14.7 trillion naira of deposits and 4.2 trillion naira of interbank takings at risk.
“The key priorities to Amcon now are the liquidation of holding in the nationalized banks and the recovery and restructuring of acquired banks’ assets,” Chike-Obi said.