The Nigerian President, Muhammadu Buhari has signed into law the AMCON (Amendment) Act, 2019 (the “Act”). This amendment comes on the heels of a 2015 amendment to the original Act which was signed into law in 2010. The Assets Management Corporation of Nigeria (“AMCON”) was set up by the Nigerian government as a “bad bank” to help mop up illiquid and high-risk assets from the balance sheet of eligible financial institution and to efficiently resolve non-performing loans (“NPLs”). At the time of AMCON’s creation, Nigeria had experienced a reduction in bank liquidity and credit expansion as well as sluggish growth in the real sector which adversely impacted the performance of banks and the Nigerian economy at large.
Although AMCON had made considerable progress with mopping up illiquid and high-risk assets, it continued to experience difficulties with resolving NPLs. With NPLs standing at over N5 trillion (over USD13 billion), AMCON required changes to its legislation to enable it improve its recovery records. It is against this background that the current amendments became necessary.
Major highlights of the Act include the removal of bank/customer confidentiality for AMCON debtors, provision of a chronic debtor list and the introduction of a requirement that the Federal Government and its institutions obtain clearance from AMCON before contracting with or making payments to AMCON debtors. The Act also protects AMCON funds from attachment by court orders.
Some of the implications of the Act are the possible erosion of bank-customer confidentiality, interference with bank-customer privacy rights as well as the ouster of the jurisdiction of courts from making interim or interlocutory orders in favour of debtors claiming against AMCON. There also seems to be no distinction made in respect of so-called chronic debtors who may have genuine cases against AMCON or the eligible financial institution from which the debt was acquired by AMCON.
The jury is still out on how effective the Act will be in curbing the NPL problem. It also remains to be seen whether AMCON debtors will challenge the provisions of the Act before Nigerian courts.
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