Connect with us

Business

Shareholders Funds To Drive Sale Of Rescued Banks

Published

on

Sanusi Lamido, governor, CBN worried by the negative perception occasioned by the delay in disposing of the rescued banks, the Central Bank of Nigeria (CBN) is proposing that the Asset Management Corporation of Nigeria (AMCON) will focus initially on purchasing qualifying non-performing loans (NPLs) along with the associated rights to underlying collaterals, when it becomes operational.

Consequently, the apex bank, which has embarked on reconciliatory moves of late to stir dwindling confidence and also carry major stakeholders along in its ongoing reform programme, would want AMCON to concentrate on margin loans given by banks badly hit by the capital market crash, as they are easier to value. Specifically, the development is expected to restore Negative Asset Value (NAV) – bank’s total assets minus total liabilities – through taking over of the bad loans by AMCON, so as to be able to report positive shareholders’ fund. Shareholders’ fund is capital invested in a business by its shareholders, including retained profits or part of a bank’s financial assets consisting of share capital and retained earnings. It is an alternative term for owners’ equity.

The implication is that investors, both local and foreign, will be encouraged to resume talks with CBN-appointed holding managers of the rescued banks which broke down due to fresh discoveries after the due diligence carried out by some of them on the embattled banks. Ultimately, these investors will be expected to contend with the minimum capitalisation, when the problem of shareholders’ funds is solved by the corporation.

In fact, in the wake of the capital market boom in 2008, the banks dipped into shareholders’ funds to purchase, under fictitious names and proxies, shares under the much abused margin loans. But banks, particularly the rescued ones, are not helping matters as they are still charging interest on some margin loans entered in their books as bad, and which AMCON is expected to purchase.

For instance, an acceptance of the letter of resignation from one of the distressed banks to an ex-staff says: “Kindly note that your public offer loan is running at 16.0 percent beginning from your resignation date.” In another instance, dividends that accrued to the shares of the same loan have been taken over by the bank through letters dated September, November and December 2009 from the registrars to the head office of the bank.

However, CBN is said to be disturbed by the delay in the disposal of the distressed banks through mergers and acquisitions, but observed that the only way to reverse the trend is through positive shareholders’ funds.

Interestingly, AMCON is also expected to distribute those assets to investment managers, who will have the option of taking a variety of portfolios through an investment strategy that will be defined by it. This could be through selling some of the shares and going into real estate. Besides, CBN sees it as a vehicle for distributing losses between the banks and the brokers, following the capital market loss of about 70 percent to the crisis.

Justifying CBN’s position, Razia Khan, global head of macro economic research, Standard Chattered Bank said: “In the case of any asset management company, one would expect it to buy assets that can be easily valued first – in this case margin loans – as there is a market for it. Even if higher than market prices are paid for the assets in order to recapitalise the institutions, this is standard practice with AMCs the world over.”

Johnson Chukwu, managing director and chief executive officer, Cowry Asset Management Limited, said: “What the CBN means is that AMCON will basically start with taking over the bad loans of the troubled banks and the collaterals which were used to secure the loans. This action is intended to make sure that their net asset value, which, for the troubled banks is all negative, will be reversed to positive. As you know, the NAV, which is the same thing as the shareholders’ funds is negative for the troubled banks because they had to take losses from their non-performing loans.

 ”When these loans are taken over by AMCON, the banks will write back the huge provisions they made for the loans into profit or extraordinary income and if the write backs are as high as their negative NAV, they will be able to report positive shareholders’ fund. For the banks to be attractive to new investors, be they local or foreign, they need to have positive shareholders’ funds.

“For instance, if an investor has to take over bank A today, he has to first inject over N200 billion to bring its shareholders’ fund to positive before injecting another N25 billion to meet the minimum capitalisation for banks. If, however, AMCON is able to reverse the negative shareholders’ fund, then the new investor will only have to contend with raising N25 billion.”

Akinbamidele Akintola, research analyst, Renaissance Group, was of the opinion that given the 10-year life span for AMCON, it will be in a position to manage the loans for recovery, post-capital injection, adding that “it would remain a part of CBN regulatory infrastructure going forward to reduce NPL levels in banks.” He however called for a clear and transparent valuation model for taking over the loans.

Continue Reading

Business

FIRS Clarifies New Tax Laws, Debunks Levy Misconceptions

Published

on

The Federal Inland Revenue Service has said that Nigeria’s newly enacted tax laws are designed to strengthen economic competitiveness, attract investments, and improve long-term fiscal stability.
The agency also clarified that the much-debated four per cent development levy on imported goods is not a new or additional tax burden, but a streamlined consolidation of several existing levies.
According a statement released Wednesday, one of the most misunderstood elements of the new tax framework is the four per cent development levy with the agency explaining that the levy replaces a range of fragmented charges — such as the Tertiary Education Tax, NITDA Levy, NASENI Levy and Police Trust Fund Levy — that businesses previously paid separately.
This consolidation, it said, reduces compliance costs, eliminates unpredictability and ends the era of multiple agency-driven levies. The law also exempts small businesses and non-resident companies, offering protection to firms most vulnerable to economic shocks.
Another major clarification relates to Free Trade Zones. Earlier commentary had suggested that the government was rolling back the incentives that have attracted export-oriented investors for decades. However, the reforms maintain the tax-exempt status of FTZ enterprises and introduce clearer guidelines to preserve the purpose of the zones.
“Under the new rules, FTZ companies can sell up to 25 per cent of their output into the domestic market without losing tax exemptions. A three-year transition period has also been provided to allow firms to adjust smoothly.
“Government officials say the reforms aim to curb abuses where companies used FTZ licences to evade domestic taxes while competing within the Nigerian market”, it said.
With the new measures, Nigeria aligns with global FTZ models in places like the UAE and Malaysia, where the zones function primarily as export hubs for logistics, manufacturing and technology.
The introduction of a 15 per cent minimum Effective Tax Rate for large multinational and domestic companies has also been met with public concern. But the FIRS notes that this policy aligns with a global tax agreement endorsed by over 140 countries under the OECD/G20 framework.
Without this adoption, Nigeria risked losing revenue to other countries through the “Top-Up Tax” mechanism, where the home country of a multinational collects the difference when a host country charges below 15 per cent. By localising the rule, Nigeria ensures that tax revenue from multinational operations remains within its borders.
Continue Reading

Business

CBN Revises Cash Withdrawal Rules January 2026, Ends Special Authorisation

Published

on

The Central Bank of Nigeria (CBN) has revised its cash withdrawal rules, discontinuing the special authorisation previously permitting individuals to withdraw N5 million and corporates N10 million once monthly, with effect from January 2026.

In a circular released Tuesday, December 2, 2025, and signed by the Director, Financial Policy & Regulation Department, FIRS, Dr. Rita I. Sike, the apex bank explained that previous cash policies had been introduced over the years in response to evolving circumstances.

However, with time, the need has arisen to streamline these provisions to reflect present-day realities.

The statement said the new set of cash-related policies is designed to reduce the cost of cash management, strengthen security, and curb money laundering risks associated with the economy’s heavy reliance on physical currency.

“These policies, issued over the years in response to evolving circumstances in cash management, sought to reduce cash usage and encourage accelerated adoption of other payment options, particularly electronic payment channels.

“With the effluxion of time, the need has arisen to streamline the provisions of these policies to reflect present-day realities,”

“Effective January 1, 2026, individuals will be allowed to withdraw up to N500,000 weekly across all channels, while corporate entities will be limited to N5 million”, it said.

According to the statement, withdrawals above these thresholds would attract excess withdrawal fees of three percent for individuals and five percent for corporates, with the charges shared between the CBN and the financial institutions.

Daily withdrawals from Automated Teller Machines (ATMs) would be capped at N100,000 per customer, subject to a maximum of N500,000 weekly stating that these transactions would count toward the cumulative weekly withdrawal limit.
The special authorisation previously permitting individuals to withdraw N5 million and corporates N10 million once monthly has been discontinued.

The CBN also confirmed that all currency denominations may now be loaded in ATMs, while the over-the-counter encashment limit for third-party cheques remains at N100,000. Such withdrawals will also form part of the weekly withdrawal limit.

Deposit Money Banks are required to submit monthly reports on cash withdrawals above the specified limits, as well as on cash deposits, to the relevant supervisory departments.

They must also create separate accounts to warehouse processing charges collected on excess withdrawals.

Exemptions and superseding provisions
Revenue-generating accounts of federal, state, and local governments, along with accounts of microfinance banks and primary mortgage banks with commercial and non-interest banks, are exempted from the new withdrawal limits and excess withdrawal fees.

However, exemptions previously granted to embassies, diplomatic missions, and aid-donor agencies have been withdrawn.

The CBN clarified that the circular is without prejudice to the provisions of certain earlier directives but supersedes others, as detailed in its appendices.

Continue Reading

Business

Shippers Council Vows Commitment To Security At Nigerian Ports

Published

on

The Nigerian Shippers Council (NSC)has restated its commitment towards ensuring security at Nigerian seaports.
Executive Secretary/Chief Executive Officer of the Council, Dr Pius Akuta, said this in Port Harcourt, while declaring open a one day workshop organized by the Nigerian Shippers Council in collaboration with the Nigerian police( Marin Division).
Theme for the workshop was ‘Facilitating Port Efficiency; The strategic Role of Maritime police “
Akuta who was represented by the Director, Regulatory Services, Nigerian Shippers Council, Mrs Margeret Ogbonnah, said the workshop was to seek areas of collaboration with security agencies at the Ports with a view to facilitating trade
Akuta said the theme of the workshop reflects the desire of the council and the Nigerian police to build capacity of police officers for better understanding and administration of their statutory roles in the Maritime environment.
He said Nigerian seaports has constantly been reputed as one of the Port with the longest cargo dwell in the world, adding,”This is so, because while it takes only six hours to clear a containerized cargo in Singapore Port, seven days in Lome Port, it takes an average of 21 days or more in Nigerian Ports” stressing that this situation which has affected the global perception index on Ease of Doing Business in Nigerian seaports must be addressed.
Akuta said NSC which is the economic regulator of the Ports has the responsibility of ensuring that efficiency is established in the Ports inorder to attract patronages.
“Pursuant to its regulatory mandate, the NSC has been collaborating with several agencies to ensure the facilitation of trade and ease of movement of cargo outside the Ports to avoid congestion”he said.
Also speaking the commissioner of police, Eastern Port Command, Port Harcourt, CP Tijani Fakai, said Maritime police has played some roles in facilitating Ports efficiency.
He listed some of the roles to include ensuring security and crime prevention at the Ports, checking of illegal fishing activities at the Ports, checking of human trafficking and drug smuggling and prevention of fire incident at the Ports.
Represented by ACP, Rufina Ukadike, the CP said police at the Ports have also helped in the decongestion and prevention of unauthorized Anchorage.
He commended the Nigerian Shippers Council for the workshop and assured of continuous collaboration.
Speaking on the dynamics of cargo handling, Deputy Controller of customs, Muhydeen Ayinla Ayoola, said the launching of electronic tracking system and dissolution of controller General Taskforce has helped to ensure efficiency at the Ports.
Ayoola who represented the custom Area Controller Port Harcourt 1 Area command, however raised concerned over rising national security threat , which according to him has affected efficiency at the Ports.
John Bibor
Continue Reading

Trending