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CBN unveils framework for new bad debt corporation
PAMC is proposed to have a minimum capital base of N10 billion, which would allow it to purchase some of the non-performing loans (bad debts) from banks and other financial institutions in the country.
Godwin Emefiele, Governor of Nigeria's Central Bank reiterated the bank's commitment towards sustaining its FX intervention programme.
This company would be known as Private Asset Management Companies (PAMC), and it would be private sector funded and managed.
This disclosure was contained in a statement signed by the apex’s Bank Director of Financial Policy and Regulation Department, Mr Kevin Amugo and entitled: “Exposure draft of the framework for licensing, regulation, and supervision of Private Asset Management Companies in Nigeria.”
The CBN noted that: “The dynamic developments in the management of risk assets in the Nigerian banking system necessitated the establishment of the Asset Management Company of Nigeria, AMCON, in 2010.”
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“The prime objective of AMCON was to manage the toxic assets of the system, which was exacerbated by the global financial crisis.”
“Given the ever evolving developments in the industry, the decline in international commodity prices with its consequent impact on risk assets in the industry, it has become expedient to proactively widen the space for the management of non-performing loans through the establishment of Private Asset Management Companies, PAMCs. This is in line with CBN’s core mandate for promoting a sound and stable financial system.”
In addition, the major functions of the PAMC were also stated as buying off non-performing and performing loans off banks and other financial institutions and disposing them and providing consultancy and advisory services to banks and other financial institutions for the purpose of restructuring receivables and other assets including the sale of such assets to third parties.
However, the corporation is not allowed to operate as banks just like the AMCON.
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