Business
AMCON Reports N2.37trn Loss
The Asset Management Corporation of Nigeria (AMCON) reported a N2.37 trillion loss on Friday, exposing the scale of financial devastation wrought by a 2009 banking crisis to be deeper than first thought.
The surprisingly large loss also raised questions about how AMCON will refinance a N1.7 trillion zero-coupon bond at the end of 2013, and may have implications for Nigeria’s national budget, according to Reuters.
The after-tax loss – which AMCON officials revealed at a news conference – comes in the first accounts to be published by the bad bank since it was set up in 2010 to absorb the debts of banks hamstrung in a crisis caused by over exposure to a weak oil and local stock market in 2008-09.
The crisis nearly sank nine lenders until the central bank intervened with a $4 billion bailout fund to keep them afloat.
The loss was a “wake-up call” that the banking sector’s problems will not be resolved as easily as first thought and that banks may end up paying a higher contribution towards its resolution, said Razia Khan, head of Africa research at Standard Chartered Bank.
“The non-performing loans that we bought were four times larger … which shows you that what was disclosed as NPLs (non-performing loans) on the books of the banks were (below) what we found when they started selling to us,” said AMCON Executive Director of Finance Mofoluke Dosumu.
“We bought four times what we initially envisaged.”
Analysts questioned how AMCON’s losses would impact its ability to repay a total of N4.5 trillion government-backed bonds used to clean up the banking sector if the value of the assets it hold continued to erode and whether the sinking fund will be sufficient in the short-term.
The banking sector has recovered sharply after the crisis with strong earnings drawing investors back to Nigerian shares following several years of turbulence in the local stock market that wiped 60 percent off their value in 2008.
The index of Nigeria’s top ten banks has gained 17.5 percent so far this year to recover from a loss of 32 percent in 2011. The main-share index is up 33 percent.
The loss figure, which was quoted as of December 2011, just reflected write downs of debts taken on at the time and equals half of Nigeria’s annual budget.
“The N4.5 trillion bonds equal about 11 percent of GDP … if AMCON can’t repay them, the government will have to. That would have a huge impact on the government’s balance sheet,” said Leon Myburgh sub-Saharan Africa strategist at Citi.
But others say the loss may be ring-fenced and AMCON may raise other revenues.
“It’s a one off loss. My understanding is that they don’t have to finance it,” said Standard Bank’s Samir Gadio.
“Effectively, they’ve just marked to market their losses at the time and we all know they acquired a lot of NPLs.”
AMCON said it had recovered N85 billion worth of bad loans and it expected to make more recoveries.
Chief executive Mustapha Chike-Obi, said he was confident the “bad bank” will be able to refinance its bonds at maturity next year and it could also choose to retire them using the proceeds of its sinking fund.
Chike-Obi said that Nigerian banks had agreed to increase their collective contributions to a post-crisis “sinking fund” used to refinance the bank’s bad debts to 100 billion naira, up from the 60 billion naira they had already put in.
It also expects to conclude the privatisation of three banks it nationalised after the crisis, by mid-2014, which would bring in some money, Chike-Obi said.
The Central Bank of Nigeria (CBN) yesterday said 33 banks have met new minimum capital requirements under its recapitalisation programme, raising a combined N4.65 trillion to strengthen the financial system.
The apex bank disclosed this in a statement marking the end of the exercise, which commenced in March 2024 and drew participation from domestic and foreign investors.
The statement was jointly signed by the Director of Banking Supervision, Olubukola Akinwunmi, and the Acting Director of Corporate Communications, Hakama Sidi-Ali.
The statement said “Over the 24-month period, Nigerian banks raised a total of N4.65tn in new capital, strengthening the resilience of the financial system and enhancing its capacity to support the economy.”
The regulator said local investors accounted for 72.55 per cent of the funds, while international investors contributed 27.45 per cent, reflecting continued confidence in the sector.
Commenting on the outcome, the CBN Governor, Olayemi Cardoso, said in the statement, “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
It added that while 33 banks have complied with the new thresholds, a few others are still undergoing regulatory and legal processes.
The statement noted, “The CBN confirms that 33 banks have met the revised minimum capital requirements established under the programme.
“A limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks.
“All banks remain fully operational, ensuring continued access to banking services for customers.”
The apex bank stressed that the exercise was executed without disrupting banking operations, ensuring uninterrupted access to services nationwide.
It further stated that key prudential indicators have improved, particularly capital adequacy ratios, which remain above global Basel benchmarks.
The minimum ratios were set at 10 per cent for regional and national banks and 15 per cent for banks with international licences.
The bank also said the recapitalisation coincided with a gradual exit from regulatory forbearance, a move it said improved asset quality, strengthened balance sheet transparency, and enhanced overall stability.
To preserve these gains, the CBN said it has reinforced its risk-based supervision framework, mandating periodic stress tests and adequate capital buffers for banks.
It added that supervisory and prudential guidelines would be reviewed regularly to strengthen governance, risk management, and resilience across the sector.
“The successful completion of the programme establishes a stronger and more resilient banking system, better positioned to support lending, mobilise savings, and withstand domestic and global shocks,” the statement said.
The Tide learnt that foreign capital inflows into Nigeria’s banking sector rose by 93.25 per cent year-on-year to $13.53bn in 2025, up from $7.00bn recorded in 2024, amid the ongoing recapitalisation drive by the Central Bank of Nigeria.
Data from the National Bureau of Statistics capital importation report showed that the banking sector remained the dominant destination for foreign capital, accounting for $13.53bn of the total $23.22bn recorded in 2025, representing 58.26 per cent of total inflows, up from 56.81 per cent in 2024.
The surge reflects heightened investor interest in Nigerian banks as they raised fresh capital to meet new regulatory thresholds introduced by the apex bank, with industry-wide recapitalisation activities driving large-scale inflows across all quarters of the year.
However, the Centre for the Promotion of Private Enterprise (CPPE) recently raised concerns over weak credit flows to small businesses despite recent banking sector reforms.
The CPPE, led by a renowned economist, Dr Muda Yusuf, acknowledged that the ongoing bank recapitalisation exercise by the CBN has strengthened the financial system, but warned that the benefits have yet to translate into meaningful support for the real economy.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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