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Reps oppose N50bn CBN bailout for distressed banks

Reps oppose N50bn CBN bailout for distressed banks
October 23
20:22 2014
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The federal house of representatives on Thursday stopped an amendment act of the Asset Management Corporation of Nigeria (AMCON) proposing a yearly payment of N50 billion by the Central Bank of Nigeria (CBN) into the resolution cost fund.

The proposed bill provides that the N50 billion should be paid periodically as determined by the CBN board.

The contributory fund, also known as a ‘sinking fund’, was created by AMCON to bail out distressed banks and financial institutions.

However, the report of the house committee on banking and currency on the amendment of the AMCON Act 2010, was considered and passed at plenary.

The lawmakers approved amendments to Sections 2, 16(5), 22(2), 34(1)-(2), 35, 46(2), 48, 57, 60 and 62 of the AMCON act.

Opposing the amendment of Section 61(2), Sekonte Davies, legislative member from Rivers and Asita, also from Rivers, said that making the CBN pay N50 billion yearly into the fund would encourage corruption in the banking sector.

“There is no provision showing how the money will be recovered,” Davies said.

“Are we saying that the federal government has become Father Christmas? We are creating room for massive corruption.”

Jones Onyereri, the chairman of the house committee on banking and currency, however, stepped down the proposed amendment.

In the proposed sinking fund amendment, the CBN is to contribute N50 billion while the banks contribute an amount equivalent to 0.3 per cent of its total assets.

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