AMCON Vows to Hold on to Capital Oil’s Assets

Mr. Mustafa Chike-obi, MD, AMCON


The Managing Director and Chief Executive Officer of the Asset Management Corporation of Nigeria, Mr. Mustafa Chike-obi Friday  in Lagos said that AMCON will hold on to the assets of Ifeanyi Uba’s troubled Capital Oil and Gas Industries Limited despite a court ruling ordering it to vacate the premises of the oil company.

A Federal High Court sitting in Abuja on Wednesday, vacated its earlier order granting AMCON immediate possession of properties belonging to Capital Oil and Gas Industries Limited and its owner, Ifeanyi Uba.

But Chike-obi who spoke during the presentation of the corporation’s full year audited group results for the year ended December 31, 2011 said: "But we are still at the property and we intend to remain there until the Court of Appeal rules. So, if they want to delay, let them delay, but we are staying there. No matter how many obstacles are put on our way by the various obligors, AMCON would ensure that its debts are fully recovered.

"The judge made a surprising ruling which we have either appealed or we are going to appeal. He basically said we should go and talk to the guy (Ifeanyi Uba) and we have been talking to him for two years. He owes us for two years - N53 billion and interest has accumulated to N12 billion - and he hasn’t paid us a kobo and so I don’t know how much talk the judge wants us to do."

At the same forum, the 2011 financial statement showed that AMCON recorded a loss after tax of N2.37 trillion.
It also showed that the institution acquired N4.23 trillion Eligible Bank Assets (EBAs), while its total assets as at December 2011 stood at N1.88 trillion.

Explaining the loss recorded, Executive Director, Finance and Operations, AMCON, Mrs. Mofoluke Dosumu said: "The N2.37 trillion was spent in protecting depositors’ funds. N1.33 trillion was spent on the five banks that successfully had merger and acquisition arrangement and N762 billion was spent to fill the holes in the three banks wholly owned by AMCON.

"AMCON turned out to be larger than when it was set up. In terms of the protection of depositors’ funds in the intervened banks, it was 25 per cent larger than what was initially envisaged. In terms of the NPLs that we bought, it was four times larger. That showed you that what was declared as NPL initially on the books of banks, was not what we found when they started selling to us. We bought four times what we initially envisaged."

Continuing, Dosumu restated that the process that would lead to the sale of the three banks wholly owned by AMCON would commence next year, explaining that the financial advisers that were appointed earlier are to look at the operations of the banks and recommend optimum mode of disposal, methodology and optimum price at which to dispose the institutions.

She also disclosed that the Central Bank of Nigeria and Deposit Money Banks in the country have agreed to increase their yearly contribution to the AMCON Sinking Fund from 0.3 per cent (30 basis point) of total assets to 0.5 per cent (50 basis points) from this year.

The Sinking Fund is a Trust Fund established by the CBN and all DMBs in Nigeria last year in line with the resolution of the banking crisis. On an annual basis, the CBN contributes N50 billion and the banks agreed earlier to contribute 0.3 per cent of total assets in their books on an annual basis, over a period of 10 years.

A breakdown of the amount showed that the commercial banks would now make collective contributions of N100 billion to the Fund, from N60 billion earlier agreed.

She explained: "The Sinking Fund contributes about 65 per cent to the cost of resolution to AMCON. The funding model of AMCON is tested on an annual basis by both AMCON and the CBN.

"At the last testing of the funding model, the banks agreed to increase their contributions from 30 basis points to 50 basis points on an annual basis, just to ensure that the full cost of AMCON is resolved within the envisaged time frame."
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