Senate Passes Asset Management Corporation Bill

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The Senate on Wednesday passed the Asset Management of Nigeria Corporation (Establishment) Bill, 2010, after adopting the report of its joint committee on Banking, Finance and Capital Market.

The corporation, when established, is to cater for the non-performing loan assets of banks in Nigeria and also assist banks to efficiently manage and dispose of eligible bank assets.

It will also issue bonds or other debt instruments as consideration for acquisition of banks, non-performing loans and outsource asset management and debt recovery agents.

The corporation is also expected to act as or appoint a receiver/manager for a debtor company whose assets have been pledged as collateral for an eligible loan.

According to the bill, the corporation has also been empowered  to require a bank to stop further transactions on the account of a debtor if “there is fund therein.

“A debtor may be declared bankrupt under the Act and the corporation will be appointed trustee of the debtor’s property,” the bill added.

Senators who contributed to the debate on the committee’s report unanimously agreed that the corporation would serve as a vehicle for resolving the huge non-performing assets of deposit money banks.

“It will clean up the balance sheets of the deposit money banks; hence their business operations will progress profitably and will be strengthened towards facilitating credit role of provider of capital to the real sector of the economy,” said Senate Leader Teslim Folarin.

Briefing newsmen, the Chairman Committee on Banking, Insurance and Financial Institutions, Sen. Nkechi Nwaogu, described the passage of the bill as a “landmark in revamping the banking sector”.

“The bill seeks to assist banks in providing liquidity for non-performing loans, thereby reducing their debt overhang,” she said.

Nwaogu said that the corporation when established would be funded by the Federal Government through the CBN and issuance of bonds.

She disclosed that the committee was in the process of amending the Nigeria Deposit Insurance Corporation Act to increase payment of depositors fund from the present N200, 000.