Banks and the Central Bank of Nigeria (CBN) yesterday, in Abuja, unanimously agreed to contribute N1.5 trillion (about $10 billion) over the next 10 years to fund the newly established Asset Management Corporation of Nigeria (AMCON) set up to buy bad debts in the banking industry.

Under the initiative, which was approved at the Bankers’ Committee meeting, the banking watchdog will provide N500 billion to the fund in support of AMCON, while banks will contribute the rest.


Also, as part of its contribution to the overall pool of what the banks have decided to financially task themselves, the Nigeria Deposit Insurance Corporation (NDIC) said it is currently looking at how to reduce the premium which the banking industry currently pay to it.


Addressing journalists yesterday shortly after the Bankers’ Committee Meeting in Abuja, Group Managing Director, Access Bank Plc, Mr. Aigboje Aig-Imoukhuede, said the industry has chosen to contribute a Sinking Fund, which will take care of any net deficit that AMCON may assume. Banks are expected to commit 0.3 per cent of the value of their individual balance sheets to the AMCON for the next 10 years. This would enable the institution meet any shortfalls in its activities.


The money is expected to be pooled into a Sinking Fund and invested in Zero Coupon Bonds. The accumulation of funds would allow AMCON meet its obligation to the ailing banks, which are expected to resume lending.This initiative, however, becomes effective from December 31, 2010.The Access Bank boss added that only in an extreme circumstance whereby the models that have been projected for the AMCON fall short of the projections, will the Nigerian tax-payer have to bear the burden of AMCOM.He also said that in no way will the burden of such commitment be borne by investors and depositors.“This step reduces the likelihood that a Nigerian bank will f