GM Foresees Litigations Over Banks Assets

Mr Demola Odeyemi, The General Manager/Chief Finance Officer, Guaranty Trust Bank, has expressed reservations on how the Asset Management Corporation of Nigeria (AMCON) intends to value assets of distressed banks.

Odeyemi, who was speaking at the 1st Young Lawyers Forum of the Nigeria Bar Association’s section on Business Law yesterday in Lagos, said that the Act setting up the corporation was silent on this.

He said that because the Act was silent on this aspect, litigations might arise from an attempt by AMCON to interpret the value of the assets.

“The Act is silent as to how the debts will be valued and what price AMCON will be willing to pay. This is a big lacuna which should be dealt with,” he said.

Odeyemi suggested that the government should take a cue from Northern Ireland where the basis for evaluation was accompanied with the passing of  the  Act.

He noted that the banks would not be willing participants in transferring their viable assets to the corporation because they would want to handle the assets themselves.

“AMCON is looking for assets that are crystallised and have no legal issues and most capitalised banks will not be willing to sell their assets since they can handle their own portfolio,” he said.

Odeyemi, who said he spoke in his personal capacity, criticised the Act for requiring banks to contribute 0.3 per cent of their balance sheet to AMCON

“It is not fair for the Central Bank to require the capitalised banks to contribute part of their capital to the distressed banks. This is particularly unfair to the shareholders of the banks,” he said.

According to reports, Odeyemi spoke on: Asset Management Corporation: Practicality or Impossibility.

But Mr Osaro Eghobamien (SAN)expressed optimism on the Act.

Eghobamien said that AMCON would provide an alternative to the liquidation of distressed banks which would in the long run be beneficial to the economy.

“The Act will have a significant impact in key areas of law particularly bankruptcy, insolvency and directors’ liability,” he said.

According to him, since the Act has broadened the definition of a debtor to include not only the borrower but guarantors and directors, the situation whereby a debtor can be declared bankrupt is widened.

He also said that the act would be instrumental in quick debt recovery because AMCON could purchase debts from distressed banks without recourse to the borrower.

The reports noted that AMCON was established for the purpose of efficiently resolving the non performing loan assets of banks in Nigeria.