Business News (Finance) — The Asset Management Corporation of Nigeria (AMCON), on Friday, reported a N2.37 trillion loss after tax three years after it was set up to absorb the bad debts of banks in the aftermath of a financial crisis.
AMCON bought bad loans from Nigerian banks worth N4 trillion "with the acquisition costs at more than twice the initial estimates" accounting for the remaining expenditure, the Chief Executive Officer Mustafa Chike-Obi told reporters in Lagos.
According to Mr Chike-Obi, AMCON's total assets amounted to N3.34 trillion.
It was not clear how the losses would be financed. AMCON's bonds are state-backed and the amount written off equals half of Nigeria's annual budget.
AMCON was set up in 2010 to absorb the sector's bad loans in the aftermath of the crisis. The bank said the largest part of the losses was a N2.1 trillion write-down of those loans.
Neither was it clear if the losses were expected, but banking sources said the value of the toxic assets had been continually eroded since it first took them on in early 2010.
AMCON also said it expects to conclude the privatisation of three banks it nationalised after the crisis, by mid-2014, which would bring in some money.
It said N85 billion worth of its bad loans had been recovered, adding that taking on those loans had prevented N4.7 trillion of direct losses to the banking sector, and some N10 trillion of indirect loses, from the financial collapse it managed to prevent.
It added that Nigerian banks had agreed to increase their collective contributions to a post-crisis "sinking fund" used to refinance the bank's bad debts to N100 billion, up from the N60 billion they had already put in.-Channelstv
