Some shareholders on Monday said the huge levies paid by commercial banks to the Asset Management Corporation of Nigeria had stifled the banks’ ability to lend.
They said the shareholders’ funds were being eroded annually by the sustained operation of the Banking Sector Resolution Cost Fund as observed in the 2014 financial year.
The News Agency of Nigeria reports that the banking sector resolution cost is a funding-pool agreed upon by commercial banks to mitigate the challenges that the nation’s banking sector may face as occasioned by the 2008/2009 global economic recession.
Investigations by NAN showed that seven commercial banks contributed N56.42 billion to AMCON in 2014.
Some of the shareholders told NAN in separate interviews in Lagos on Monday that the banks’ contributions to AMCON were making their stocks unattractive to investors due to dwindling and unimpressive dividends.
Boniface Okezie, the National Chairman of the Progressive Shareholders Association of Nigeria, said the shareholders were worried by AMCON’s resolutions regarding what the banks should contribute.
Okezie said the banking stocks were no longer attractive to both local and foreign investors because of decreased dividends, concerns over regulatory penalties and threats to banks shareholders’ funds.
According to him, strict regulatory policies and levies have made it difficult for banks to lend to the real sector of the economy.
Okezie said commercial banks would have declared higher dividends in 2014 if not for various levies paid to regulators, especially AMCON.
He also identified the Central Bank of Nigeria headwinds and compulsory levies charged by AMCON in 2014 as other major challenges that made it difficult for the banks to intermediate in the economy and create value for investments.
Okezie alleged that AMCON had overstayed its welcome and should wind down its operations as it was daily becoming a burden to the Federal Government.
“AMCON should close shop and should not continue to exist to the detriment of the shareholders and the national investment,” Okezie said.
Also, Sunny Nwosu, the National Coordinator of the Independent Shareholders Association of Nigeria, said the shareholders were groaning under poor dividends and low capital appreciation, while AMCON was collecting 0.5 per cent of banks’ total assets annually.
He said this had made most of the banks that contributed to AMCON unable to declare dividends during the period under review.
Nwosu also said the banking sector was over regulated and called for a review of the various policies introduced by the CBN in the interest of the economy.
NAN reports that some commercial banks acknowledged the negative impact of regulatory policies in their 2014 operations.
It also reports that the Central Bank of Nigeria and commercial banks had in 2011 signed a Memorandum of Understanding for the establishment of the fund.
The idea of a sinking fund was to assist AMCON to meet its goals and also to ensure that government will not bear the cost of financial crisis in future.
Under the initial MoU arrangement, the CBN contributed N50 billion and any participating bank was expected to contribute 0.3 per cent of its total assets annually for 10 years.
But the CBN in 2013 reviewed the contribution upwards to 0.5 per cent of such bank’s total assets and 33.3 per cent of off-balance sheet assets into the fund pool.
A breakdown of the figures contained in the banks’ 2014 annual reports obtained by NAN showed that FBN Holdings paid the highest levy of N17.13 billion during the period under review.
It was followed by UBA with N11.09 billion, while GT Bank paid N9.52 billion.
Also, Access Bank paid N8.52 billion, FCMB contributed N4.93 billion, Sterling Bank parted with N3.56 billion, while Wema Bank paid N1.67 billion.
NAN.