Worried by the resurgent of huge toxic loans in the banking sector, Mr. Ahmed Kuru, Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON) yesterday in Lagos called on the Nigerian authorities to revisit the Failed Bank Act so that operatives in the banking sector would be made to account for their actions, just as he urged banks to immediately strengthen their risk management framework to stem the negative growth.

Kuru who spoke yesterday when he played host to officials of Risk Management Association of Nigeria (RIMAN) at AMCON Lagos office, said the reintroduction of the Failed Bank Act into the country’s financial system will not only curtail the current trend of financial rascality on the part of some bankers, he said it would bring discipline to the banking industry in general. RIMAN led by its President, Mr. Magnus Nnoka, CRM, the Chief Risk Officer, Coronation Merchant Bank; were in AMCON on a business visit.

Having been privileged to have been on both sides of the divide – as a banker and now on the regulatory side, Kuru explained that given the huge resources that are available to financial institutions and the pivotal role they play to the development of the economy makes it mandatory for financial institutions to take the issues of risk management seriously to prevent what happened during the global financial crisis.

He suggested that in line with the fight against corruption, there was also need to fight against impaired and arranged credits so that operators are held responsible for booking credits contrary to their credit policy, that go bad under their supervision.

Reiterating that one of the reason for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON was because of the prevalence of weak risk management framework by financial institutions, Kuru said that the trend became a baggage, which contained all sorts of bad omen for the economy including poor corporate governance structure, lack of robust risk management strategy and lack of adherence to laid down principles that govern credit approvals by financial institutions.

He added: “I have been on both sides, therefore, I can authoritatively comment on issues relating to risk management. Immediately after the intervention of the Central Bank of Nigeria (CBN) in 2009, they insisted that risk management must be given prominence right from the Board level to the account officer. What we have noticed now is the lack of consequent framework to manage the risk structure. We have noticed prevalence of key men risk. Credits are booked with impunity without any intentions of being paid. The grievous impunity is taking place along the credit process. There is the urgent need to revisit the failed bank act so that operatives become responsible for their actions. We believe it will bring discipline to the banking industry.”

Kuru who said the damage financial institutions do to the economy when they book fictitious loans was worse than corruption added: “AMCON is currently sitting on huge stock of non-performing loan, with banks looking for liquidity to book more loans. As practitioners, you need to join the campaign to bring sanity in own credit process. You can clearly see that the system is skewed towards accommodating large credits, which pose serious survival challenges to the financial institutions on failure. Whilst the small credit SMEs always require regulatory intervention to be accommodated. Given what I have seen in AMCON, we must bring both the obligors and the operators to account for the bad credits.”

A new initiative by ACCA (the Association of Chartered Certified Accountants), the global accountancy body, has highlighted 10 key drivers that are already changing business processes, people and services.
The report also addresses how the finance function within those businesses will need to prepare and adapt to meet transformative challenges.
Thomas Isibor, Head of ACCA Nigeria said: ‘Few sectors are going to experience the impact of new tech more than Finance and Accountancy.
‘Preparing now for the inevitability of change is even more vital for these functions, and forward-thinking should be every business’ strategic priority.
Isibor continued: ‘Challenges such as digital, risk, the global economy, politics, legislation, cyber security, ethics, even climate change – are all set to impact business and the Finance department in potentially unimagined ways.’

Technology – more than just Automation and AI – is already creating the most seismic impact on the Finance, Audit and Accountancy functions. The industry is in a race for future relevance.
The ACCA has identified four broad imperatives for any CFO or partner looking to optimise how technology can add – and not detract – value from their organisation:

to understand how to use the information available to them to provide strategic insight in real time;

to think forwards not backwards and maximise the use of technology to do this;

to ensure they have in place effective and efficient processes that satisfy the overall business requirements of finance, and to capture, measure, report and predict future performance in a much more agile manner to support better and quicker decision making.
Isibor added: ‘Preparation and readiness now is key,’

‘No technology has ever made an impact without first being adopted by people. The sooner we recast this challenge as one of people and processes, the sooner we’ll make progress. We have to be ready for what lies ahead.’

Mr. Ahmed Kuru, Managing Director/CEO, Asset Management Corporation of Nigeria (AMCON) has hinted that AMCON may disengage Asset Management Partners (AMPs) that cannot cope with the speed and enormous challenges of debt recovery expected by the corporation.

He also promised that the corporation may assign more accounts to AMPs that have shown aggression and zeal based on the review of the AMP scheme so far. He made this declaration at the 2019 edition of the AMCON/AMPs Interactive/Feedback Session in Abuja.

AMPs, are consortiums appointed by AMCON after a rigorous selection process with specialist skills required to ensure recovery and debt resolution; banking, legal, valuation and accounting. Kuru said that collaborating with AMPs became necessary because AMCON has a total loan portfolio of over 12,000 loans of various sizes and sectors that are still lingering many years after the corporation was established. He stated that when this is compared to AMCON’s staff strength, it became obvious that the corporation surely needed a strategic approach to improve coverage, recovery and results.

Kuru also disclosed that the AMPs are currently handling over 6,000 accounts within AMCON portfolio. Although in terms of weight, the accounts, which have been outsourced to AMPs constitute only 20% or N740 billion of the total EBA portfolio of N3.7trillion. AMCON he insisted places equal importance on the recovery efforts as they count towards the achievement of the corporation’s core mandate.

To achieve the mandate as part of the corporation’s renewed strategy to resolve these loans, he said, AMCON in 2016 introduced the AMP scheme to assist the corporation’s recovery activities especially in tracing, identification and location of obligors with the intent to resolve their outstanding indebtedness; tracing, identification and location of assets of obligors (both pledged and unpledged) to enhance the EBA value, and achieve set recovery objectives.

The AMPs he further said were also empowered to enable them get involved in negotiation of settlement & restructuring terms with identified obligors in line with approved guidelines; pursuing & enforcing debt recovery and collection activities geared towards optimization of assigned portfolio to achieve set targets and initiation of legal actions to further the loan recovery mandates in line with approved guidelines, amongst other obligor engagements.

With this laid down guideline and with AMCON sunset in sight, Kuru said AMCON is more aggressive with its recovery strategy and also expects its partners to equally step up their game because the corporation will no longer accommodate any AMP that is not moving on the same speed.

“We know it is not easy the jobs we have assigned to you. Recovery is a difficult job but even at that, a few of you (AMPs) have shown they cannot cope; we may have no choice to disengage such partner. But those that have done well, we will upgrade and even assign more responsibilities to such partners because there is indeed need for speed in this assignment. We are convinced that the AMP programme is key to the success of AMCON, and we will give you all the necessary support to make you succeed in this exercise,” the AMCON boss added.

Principal Partner, Lexavir Partners, Mr. Francis Chuka Agbu, SAN and AMCON’s Group Head, Enforcements, Mr. Aliyu Kalgo who also spoke at the forum called on the AMPs to leverage the special powers as provided by the AMCON Act 2010 as amended to improve on their assignment.

Other speakers at the forum include Mr. Benedict Daminabo, who spoke on AMCON Enforcement Procedures; Mr. Kunle Olalekan who dealt with the issues of Share Tracing and Transfer. Other presenters include, Mr. Aaron Agada (Asset Tracing & Recovery); Abdulazeez Baba (AMP Manual of Operations) and Mr. Jude Orhotowho and Steven Olateru (Use of AMCON Portal).

There were also Mr. Patrick Daniels (Commission & Claims); Mr. Adetayo Osunnaiye (Enterprise Risk Management) as well as Mr. Paul Odiwe (Post Enforcement Management).