When the global financial crisis hit in 2008, Nigerian financial institutions were left with a staggering amount of non-performing loans. To keep the financial system from imminent collapse, the Government set up Asset Management Corporation of Nigeria (AMCON) as an intervention agency to help save distressed banks from cataclysmic devastation. In this interview with Signature Ranking, AMCON Managing Director/Chief Executive Officer, Ahmed Lawan Kuru talks about recent interventions and the state of the corporation…Excerpts
Q: AMCON was established shortly after the Global Financial Crises to ensure some form of financial stability for Nigerian companies exposed to the meltdown, has AMCON been largely successful?
A: AMCON has been very successful. Especially when you look at the objective of why AMCON was setup ab initio. As you rightly pointed out that it was setup during the 2008/2009 financial crises to support financial institutions to withstand the financial turmoil at that time. A lot was happening then, lots of those banks had loans that were not performing and as a result of that, they were not giving out fresh loans to entrepreneurs. So, the main objectives then at that time was to provide liquidity, buy up these bad loans and ensure that there’s financial stability in the financial institutions. And as you know the whole country rests on the financial infrastructure, and to a greater extent that was achieved. More than 14,000 loans were bought, more than
N3.3trillion was invested. The banks were saved. We saved over N4trillion depositors fund, over 15,000 workers jobs, but that was one leg, the second leg now is to recover from the obligations what was given out for the financial intervention. To answer your question directly, yes it has been successful based on the objective of why AMCON was setup.
Q: Does this in a way align with what happened during the tenure of President Obama, where the government packaged stimulus fund saved General Motors from going bankrupt. Is there a correlation between what AMCON did and what the U.S government did at that time?
A: Different governments adopt different strategies, the US strategy was institution specific, where the US Government intervened directly with General Motors as an example. Here it was financial institution specific. The intervention was for commercial banks. However, there’s a second leg to it, after buying all the loans from the commercial banks, now AMCON in certain strategic ways invested into some of those businesses to keep the companies afloat. But the difference between General Motors and Nigerian companies was that the US intervention was direct, while we first went through the financial institutions to acquire the loans and then we look at those we believe that a little intervention will return the companies to business.
Q: In the first leg of the objective of AMCON, it was to rescue financial institutions with large number of non-performing loans. The second-leg is now the aviation sector with the likes of Arik and Aero being taken over by AMCON. Now there have been conversations going on about a National Carrier. Is there any plan to merge both Aero and Arik into a national carrier or divest from both entities?
A: Everything in AMCON is for sale excluding the workers. We intervened in Arik as a matter of national interest. As at that time Arik carried more than 50% of air-traffic passengers and if anything should happen to Arik, it will affect the traveling public. And travelling in Nigeria is also a security issue. Once we go into any entity we always have the end in mind, and the end is always the divestment processes after putting in the required structures on ground. For Aero, we have gone very far, we have gone through the divestment processes, and we are now in the process of getting the necessary approvals to conclude. For Arik we have also started. We have financial advisers, Vetiva and Renaissance Capital, they are advising us on how to divest from Arik.