Nigeria’s President Muhammadu Buhari fired the head of a government-owned bad bank set up to resolve a financial crisis five years ago, his second change of leadership of a key state company in a month.
Mustafa Chike-Obi, chief executive officer of the Asset Management Corp. of Nigeria, or Amcon, and a former Goldman Sachs Group Inc. bond trader, was replaced yesterday by Ahmed Lawan Kuru, according to an e-mail from Femi Adesina, a presidential spokesman.
It’s an “enigmatic” decision because Amcon’s board had a mandate until November, said Bismarck Rewane, chief executive officer of the Lagos-based consultancy Financial Derivatives Co. Chike-Obi didn’t answer calls to his mobile and Adesina said by phone he didn’t know why Buhari changed Amcon’s management. Kuru is a former managing director of Enterprise Bank Ltd., which was owned by Amcon until last year.
“Amcon has a good reputation for competence,” said Rewane. “Chike-Obi’s very bright and highly-regarded.”
Buhari, who came to power in May after defeating Goodluck Jonathan in a campaign pledging to clamp down on corruption, appointed Emmanuel Ibe Kachikwu as group managing director of the state-run oil company, the Nigerian National Petroleum Corp., on Aug. 4.
Chike-Obi ran Amcon since it was established in 2010 to buy non-performing loans as banks and the economy of Africa’s biggest crude producer suffered from the oil price crash of 2008 and 2009. It bought more than 12,000 loans from industries including aviation, gasoline marketing and manufacturing for about 1.8 trillion naira ($9 billion).
Amcon managed to collect or reorganize 57 percent of the bad debts it took on at a rate of 107 percent what it paid for them, Chike-Obi said in May. While that was above the agency’s overall recovery target of 80 percent, the remaining loans would be harder to fix, he said.
Chike-Obi said in the same interview he didn’t want to offer banks another bailout even as non-performing loans rose in response to the latest plunge in oil prices. It may prove difficult for Amcon to maintain that stance, according to Rewane.
“Whether we like it or not, Amcon is going to have to start buying assets again,” he said. “Asset quality is beginning to deteriorate because of the downturn in economic activity.”
Growth in Africa’s largest economy will decelerate to 4.8 percent this year, about half the average of the last decade, according to the International Monetary Fund.
Non-performing loans stood at 2.9 percent at the end of December and are rising, the central bank said in April. The ratio will climb to between 5 percent and 10 percent by the end of 2015, Fitch Ratings said last year.
As well as recovering its loans, Amcon is tasked with selling the last of its bank holdings. It owns Keystone Bank Ltd. and has stakes in Unity Bank Plc and Wema Bank Plc.
Amcon is meant to be wound down by 2023, when 3.8 trillion naira of bonds held by the central bank mature.
Buhari also named Kola Ayeye, Eberechukwu Uneze and Aminu Ismail as executive directors, taking over from Mofuluke Dosumu, Hewett Benson and Abbas Jega.
Kuru became head of Enterprise Bank in 2011 after it was nationalized by Amcon. He returned the lender, which Heritage Banking Co. bought for 56.1 billion naira ($281 million) in 2014, back to profitability, which stands him in good stead for running Amcon, according to Sewa Wusu, head of research at Sterling Capital Markets Ltd.
“He seems to have the skills and expertize to do the job,” Wusu said by phone from Lagos. “His priority will be to manage Amcon’s assets well and get good returns for taxpayers.”