Debtors who have failed to meet their obligations to the banks are now finding themselves being pursued by Asset Management Corporation of Nigeria, AMCON. Lamido Sanusi, Governor of the Central Bank of Nigeria (CBN) has praised AMCON for what it has achieved so far in its campaign to reduce non-performing loans.
“Since 2011, the non-performing loans situation has improved significantly,” he says. “The target is for it to be at an average of 5 per cent and that is where we are close to. Liquidity and capital adequacy ratio has also increased across the sector. The achievements recorded by AMCON are so far laudable.”
“Most of our borrowers are constructive; they continue to approach us in order to restructure or repay. Many such restructured loans are now performing.”
The corporation has recovered N600 billion ($3.67 billion) from the bad debts it bought from the banks last year. By the end of this year it hopes to recover N1 trillion.
“We are very satisfied with the progress so far, but we have set a very ambitious target for this year in terms of debt recovery,” says Mustafa Chike-Obi, AMCON’s Managing Director and CEO. “We hope to meet the targets we have laid out.”
AMCON takes a sympathetic approach to debtors it considers honest but who have found themselves in difficulties through circumstances beyond their control. They have their obligations restructured.
However, businesses that no longer make sense are liquidated and merged with viable businesses, while those who simply refuse to pay are pursued “aggressively”.
“Luckily most of our borrowers are constructive; they continue to approach us in order to restructure or repay,” says Mr Chike-Obi. “Many such restructured loans are now performing.”
He admits he expects recovering loans to get more difficult as the corporation seeks to tackle hardcore non-payers.
“The easier loans get restructured first. We are recovering at a rate of over 100 per cent of our purchase price, but as time goes by we will have to deal with the more difficult loans, the ones people choose to go to court for. AMCON has extensive recovery powers and we hope they will be sufficient for the difficult recovery issues we have to deal with.”
Lawyers and recovery agents are being employed to pursue its debtors across the country.
As an example, AMCON recently obtained a court order to take over the Delta Steel Company, in Delta State, from India-based Global Infrastructural Holdings, for failing to settle a N30 billion syndicated loan that it obtained from five banks.
The corporation also has extensive legal backing to go after assets abroad and will declare some borrowers insolvent in the event that they are unable to pay off the loans.