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AMCON Worries over Toxic Loans, Seeks Return of Failed Bank Act

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Mr Ahmed Kuru, managing director, Asset Management Corporation of Nigeria (AMCON) has advocated the return of the failed bank Act in view of the resurgent huge toxic loans in the banking sector.

 

According to him, the development would make operatives in the banking sector would be made to account for their actions, just as he urged banks to immediately strengthen their risk management framework to stem the negative growth.

 

Kuru who spoke when he played host to officials of Risk Management Association of Nigeria (RIMAN) at AMCON Lagos office, said the reintroduction of the Failed Bank Act into the country’s financial system will not only curtail the current trend of financial rascality on the part of some bankers, he said it would bring discipline to the banking industry in general.

 

RIMAN led by its President, Mr. Magnus Nnoka, CRM, the Chief Risk Officer, Coronation Merchant Bank; were in AMCON on a business visit.

 

Having been privileged to have been on both sides of the divide – as a banker and now on the regulatory side, Kuru explained that given the huge resources that are available to financial institutions and the pivotal role they play to the development of the economy makes it mandatory for financial institutions to take the issues of risk management seriously to prevent what happened during the global financial crisis.

 

He suggested that in line with the fight against corruption, there was also need to fight against impaired and arranged credits so that operators are held responsible for booking credits contrary to their credit policy, that go bad under their supervision.

Reiterating that one of the reason for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON was because of the prevalence of weak risk management framework by financial institutions, Kuru said that the trend became a baggage, which contained all sorts of bad omen for the economy including poor corporate governance structure, lack of robust risk management strategy and lack of adherence to laid down principles that govern credit approvals by financial institutions.

 

He added, “I have been on both sides, therefore, I can authoritatively comment on issues relating to risk management. Immediately after the intervention of the Central Bank of Nigeria (CBN) in 2009, they insisted that risk management must be given prominence right from the Board level to the account officer. What we have noticed now is the lack of consequent framework to manage the risk structure. We have noticed prevalence of key men risk. Credits are booked with impunity without any intentions of being paid. The grievous impunity is taking place along the credit process. There is the urgent need to revisit the failed bank act so that operatives become responsible for their actions. We believe it will bring discipline to the banking industry.”

 

Kuru who said the damage financial institutions do to the economy when they book fictitious loans was worse than corruption added, “AMCON is currently sitting on huge stock of non-performing loan, with banks looking for liquidity to book more loans. As practitioners, you need to join the campaign to bring sanity in own credit process. You can clearly see that the system is skewed towards accommodating large credits, which pose serious survival challenges to the financial institutions on failure. Whilst the small credits/SME always require regulatory intervention to be accommodated. Given what I have seen in AMCON, we must bring both the obligors and the operators to account for the bad credits.”


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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