Teddy Oscar, Abuja
The House of Representatives on Monday disclosed that the Central Bank of Nigeria (CBN) and commercial banks have agreed to the establishment of a sinking fund that would see the apex bank make a N50 billion contribution annually, while the commercial banks would be required to contribute 50 basis of their total assets yearly.
Speaking at the one-day public hearing on a bill to amend the Assets Management Corporation of Nigeria (AMCON) Act 2010, the chairman of the House Committee on Banking and Finance, Hon. (Sir) Jones Chukwudi Onyereri, noted that the fund would aid AMCON meet its obligations arising from debt securities issued by it.
“While I will not go into the details of the amendment, of which most of you have seen already, let me go into the highlights of the proposed amendment. The key component of the amendment bill relates to setting up of a Sinking Fund or Resolution Cost Fund.
“It basically obligates banks to contribute annually an amount equivalent to 50 basis points of its total assets to the fund and CBN to contribute N50 billion to the fund,” he hinted.
Onyereri noted that the obligations arising from the proposed amendments have already been agreed to and embodied in a written agreement between CBN and the commercial bank banks.
“What this bill, therefore, seeks to do is to codify the obligations of both the CBN and the banks, and to give the previous agreement between parties the force of law,” he added.
The amendment, he said, was aimed at strengthening AMCON as an institution to be able to efficiently carry out its function, adding that the fund will “insulate the tax payer from obligations occasioned by financial mismanagement by the banks.”
Onyereri further hinted that that the N600 billion that was recovered from bad debts by AMCON had restructured a lot of non-performing loans.
Meanwhile, the Securities and Exchange Commission (SEC) has kicked against Section 60(c) of the proposed amendment to the bill, which seeks to exempt AMCON from complying with the provisions of the Investment and Securities Act (ISA) 2007.
In her submission, Saadatu Mohammed Bello, executive commissioner, legal and enforcement, who represented Aruma Oteh, director general, said that AMCON should comply with the ISA 2007 with respect to capital market matters because noncompliance would mean the corporation’s power superseding the nation’s constitution.
In his opening speech, Aminu Waziri Tambuwal, speaker of the House, observed that AMCON was created out of the need to cushion the public against future shocks in the banking system.
Represented by Garba Datti, deputy minority whip, Tambuwal said that the hearing was part of a carefully laid down strategy by the 7th Assembly to ensure that the nation’s financial sector is given the needed impetus to function properly.
“We hope to put all necessary measures in place to ensure that the problem or the burden of bank failures does not remain a recurring decimal in our nation,” he added while urging the lawmakers to protect the welfare of the people, who had borne the major brunt of financial institutions.