Contrary to reports in sections of the media that Mustafa Chike-Obi, the immediate past Chief Executive Officer and Managing Director of the Assets Management Corporation of Nigeria (AMCON), was sacked on Tuesday, facts have emerged to show that his tenure elapsed and he had submitted a notice of resignation.
Section 10(3)(a) of the AMCON Act 2010 stipulates that: “a member of the board appointed pursuant to this section shall hold office for a term of five years.” Having served out his tenure (July 2010 – June 2015), Mr Chike-Obi had indicated that he was ready to quit, especially as he had attained the age of 60 and sought to pursue other interests.
Following the constitution of a new management board for the corporation by President Muhammadu Buhari, and subject to Senate confirmation, various analysts have weighed in on the performance of AMCON in the five years it has existed.
“AMCON, as a much-needed bad bank, was created to relieve our financial institutions of crippling non-performing loans; recapitalize the banking industry; and do all these at a reasonable cost that will not adversely affect the economy. In assessing the corporation therefore, I must say it has earned a 90% pass mark,” said Daniel Akintola, a banker.
“We must not forget what happened during the failed banks era and how it affected consumer confidence and reversed any gains Nigeria had made in getting more unbanked people to open accounts. In mopping up the toxic loans, I must say that AMCON has done exceedingly well and has kept the economy going. The new management must therefore capitalize on the gains of its predecessor by ensuring that recoveries are maximized and disposal of assets are handled efficiently.”
Analysts at Financial Derivatives Company (FDC) have also advised that retaining the ongoing operations by AMCON will continue to serve as a pre-emptive strike against possible future upheavals in the banking industry and by extension the economy, as financial sector crises are usually accompanied by worsening macroeconomic performance.
“For instance, a distressed banking sector will be a serious obstacle to economic activity and aggravate the effect of adverse shocks like the tightening of monetary policy, the end of a credit boom, or a reversal in foreign capital inflows,” the FDC stated. “A distressed banking sector will mean firms may be unable to obtain credit to deal with a period of low internal cash flows. In fact, lack of credit may force viable firms into bankruptcy. Similarly, lack of consumer credit may worsen declines in consumption and aggregate demand, aggravating unemployment.”
The role of AMCON in the economy has also been reviewed by global authorities such as the International Monetary Fund (IMF), Standard and Poor’s Ratings Agency and Fitch Ratings, amongst others; with all of them concluding that its role was instrumental to providing financial system stability.
Before his appointment to manage the affairs of AMCON, Mr Chike-Obi was previously a founder and managing partner of Madison Park Advisors, a financial service advisory and consulting firm in the USA, specializing in hedge fund and private equity investment advice. He has also held senior positions in various Wall Street firms including Goldman Sachs, Bear Stearns and Guggenheim Partners amongst others.
Source : BusinessDay