Is the Asset Management Corporation of Nigeria Designed to Fail?

Abstract

The financial crisis that hit the system impacted, and is still impacting, adversely on the economy. It became revealed that though the banks grew bigger post-consolidation, they did not necessarily become better managed institutions. Following the joint banking audit by the Central Bank of Nigeria and the Nigerian Deposit Insurance Corporation, it was revealed that the banks were saddled with huge non-performing loans in their books which in some cases completely eroded shareholders' equity in the affected institutions. If these so-called toxic assets are left in the books of the banks, it would have adverse consequences on their operations and viability. The Asset Management Corporation of Nigeria was therefore set up, under the terms of the Asset Management Corporation of Nigeria Act 2010, as a special purpose vehicle to free the banks from the devastating grip of these toxic assets. A perusal of this law establishing the corporation reveals that there are some provisions in the law which could adversely affect the operations of the corporation. This article is an exposé on those provisions with suggestions on what should be done to ensure that the Asset Management Corporation of Nigeria unfailingly delivers on its mandate.

Keywords: Financial Crisis, Toxic Assets, Asset Management Corporation of Nigeria, AMCON, Asset Management, Central Bank Of Nigeria, Nigeria Deposit Insurance Corporation, Banks, Banking Crisis