In recent times, many Nigerian banks have become seriously distressed. While some merged in order to stay afloat, others went under. The global financial depression manifest especially in the U.S.A is widely believed to have initiated this awful turn of events. Finally, things got so bad that many countries took measures to arrest the situation. Nigeria was not left behind. Consequent upon this, the Assets Management Corporation of Nigeria (A.M.C.O.N) was established on July 19th, 2010. The stated objective of this body is the resolution of the non-performing loan assets of banks in Nigeria and other related matters. The Researcher is tasked with looking into the situation of the distressed banks. Furthermore, he is tasked with appraising critically, the role of the Assets Management Corporation of Nigeria in resuscitating the said distressed banks and providing solutions for their recovery and hence, continued stay as going concerns in the financial sector. It will surely be very sensible to start with the Assets Management Corporation of Nigeria as the foundation. In particular, the researcher will thoroughly dissect the afore-mentioned Act with a view to ascertaining there from, the exact objects, powers, functions; etc of the Corporation. In turn, this will aid in rendering a clear picture of the modus operandi of the Corporation with regards to achieving the objectives stated in the Act. The researcher will also highlight the way similar issues are handled in other countries. Inevitably, some criticisms raised by text writers, commentators, financial experts, lawyers; etc will be presented as they come to give this whole project a multi-faceted outlook. The researcher will approach the afore-mentioned tasks in a multi-dimensional way using various techniques, inter alia, analytical, comparative and narrative. The whole study envisaged in this project will be divided into five chapters for concise but thorough analysis. Chapter One will be dedicated to the introduction of the work. Chapter Two will tackle the topic of banks in distress; causes and characteristics; etc. Chapter Three will be centred on the Assets Management Corporation of Nigeria. Chapter Four will be hinged on the analysis of the role played by the Corporation in the resuscitation of distressed banks in Nigeria. Chapter Five, being the last, will be exclusively reserved for criticisms, recommendations and conclusion. It is the fervent hope of the researcher that at the end of this work, the efforts expended will succeed at bringing some illumination into this novel area and highlight especially, the legal means of the Corporation’s intervention in saving these banks from going under.

1.1 Introduction -- -- -- -- -- -- -- --1
1.2 Definition of key Terms -- -- -- -- -- --6
2.1 Background -- -- -- -- -- -- -- --10
2.2 Causes-- -- -- -- -- -- -- -- --13
2.3 Characteristics of Banks in Distress -- -- -- -- --16
2.4 Effects of Distress in Banks -- -- -- -- -- --18.

ASSETS MANAGEMENT CORPORATION OF NIGERIA 3.1 Background -- -- -- -- -- -- -- --20
3.2 Purpose and Objectives -- -- -- -- -- --20
3.3 Functions -- -- -- - -- -- -- --21
3.4 Powers-- -- -- -- -- -- -- -- --22
3.5 The Equivalent Situation in other countries -- -- -- --24
3.5.1 U.S.A -- -- -- -- -- -- -- -- --24
3.5.2 Bad Banks -- -- -- -- -- -- -- --27
4.1 Background -- -- -- -- -- -- -- --31
4.2 Methodology -- -- -- -- -- -- -- --32
4.3 Steps taken so far -- -- -- -- -- -- --41
4.4 The Role Played by A.M.C.O.N Contrasted with the Roles Played by other
relevant Bodies. -- -- - -- -- -- --44

5.2 Criticisms -- -- -- -- -- -- - --48
5.3 Recommendations -- -- -- -- -- -- --55
Bibliography -- -- -- -- -- -- -- -- --58

Bello V A.G Oyo State (1986) 5 N.W.L.R (Pt. 45) 828 54
Vacher and Sons Ltd V London Society of Compositors (1913) All E.R 241 54

Assets Management Corporation of Nigeria Act 2010 Capital Gains Tax Act Cap. 42 L.F.N 1990
Company and Allied Matters Act, Cap. C. 20 L.F.N 2004 Companies Income Tax Act Cap. C. 21 L.F.N 2004 Emergency Economic Stabilization Act 2008
Nigerian Deposit Insurance Corporation Act 2006 Stamp Duties Act Cap. S. 8 L.F.N 2004


A.M.C.O.N Assets Management Corporation of Nigeria
All E.R All English Reports
C.B.N Central Bank of Nigeria
E.B.A Eligible Bank Asset
E.F.C.C Economic and Financial Crimes Commission
E.F.I Eligible Financial Institution
F.M.O.F Inc. Federal Ministry of Finance Incorporated
I.C.P.C Independent and Corrupt Practices Commission
N.D.I.C Nigerian Deposit Insurance Corporation
N.S.E Nigerian Stock Exchange
N.W.L.R Nigerian Weekly Law Reports
S.E.C Securities and Exchange Commission
S.P.V Special-purpose Vehicle

1.1 Introduction
A novel work, especially one of this kind, cannot be gone into with any reasonable hope for success if a proper background, however brief, is not laid.
The work to be tackled in this chapter is the legal appraisal of the role played by the Assets Management Corporation of Nigeria (A.M.C.O.N)1 in the resuscitation of banks in distress.
Consequently, it is imperative to in turn, introduce in some manner, the Asset Management Corporation of Nigeria and show the history of banks in distress.
The Assets Management Corporation of Nigeria Act2 was signed into law on 19th July, 2010.
The purpose of the Act was stated to be the efficient resolving of the non-performing loan assets of banks in Nigeria, and related matters.
Therefore, the Corporation would help to stimulate the recovery of the financial system from the recent crisis by boosting the liquidity of troubled banks, by buying their non¬performing loans, thus aiding in the recapitalization of banks.
1 Hereinafter known as the Corporation 22010 (Hereinafter known as the Act).

According to Olayinka Ogun, a Legal Practitioner, the Act is seen as a child born out of circumstances to ensure the affected banks remained a going concern.3
The pertinent question at this function is, “what circumstances directly led to the state of affairs which necessitated the establishment of the Corporation?”
It is a fact that by 2008, there was a global economic recession which was ravaging the whole world. Nigeria was not left out.
The recession devastated several economies, leading to massive retrenchment of workers across the globe, liquidation of several companies and banks, widespread bankruptcy, etc. In Nigeria, the aftermath was horrendous as so many banks in Nigeria were affected.
Consequently, on August 14 2009, the CBN governor, Alhaji Sanusi Lamido Sanusi sacked the Chief Executive Officers (C.E.Os) of five (5) banks for imperiling the financial health of their organizations.4
Another pointer to the necessity of establishing the Corporation can be seen in the Memorandum by the Securities and Exchange Commission (S.E.C) to the National Assembly on the Draft Bill to establish Assets Management Corporation5 (which later become A.M.C.O.N). In the Memorandum, S.E.C gave some rationale for the establishment of the Corporation.
3Tope Adebayo LLP;, 18th May, 2012, 24th May, 2012 5 S.E.C Memorandum 2009

First, there were the problems experienced by the Nigerian Capital Market which led to a significant reduction in asset value and diminished confidence of investors. This is obviously highlighted in market turnover which dropped by 71.1% in 2009 showing investors’ apathy caused by declining share prices, evidenced by a 45.8% and 33.8% loss in the N.S.E. All share index in 2008 and 2009, respectively.6
Secondly, there was a massive loss of value in Equity market capitalization. Also, recovery was very difficult because of the heavy leverage by operators and investors as well as banks’ exposures to the Capital market.
Again, the problematic imbalance in demand and supply of equities led to the sluggishness of prices. Another rationale was the desperate dumping of stocks by banks which seriously depressed prices and caused paranoia in the entire financial system. Also, the balance sheets of banks were seriously weighed down by the burden of non-performing assets arising from marginal loans.
Then, there was the ineptitude of operators who instead of engaging in intermediate activities were engrossed in efforts to resolve their indebtedness. The necessity for the establishment of the Corporation is shown also in the CBN Public statement On the Recapitalization of Eight Nigerian Banks in which the circumstances which let to the deterioration of assets of eight Nigerian banks and suggestions for their recapitalization were discussed.

In that statement, the CBN stated quite emphatically that the establishment of the Corporation was a desperate measure made to bring normalcy to the system. Another reason which made the establishment of the Corporation a worthwhile step was the inability of the existing financial regulatory bodies like C.B.N, N.D.I.C and F.M.O.F Inc. to address the issues.
Consequently, it was important to establish a Special- purpose vehicle (S.P.V) to curb the menace. The Corporation is an S.P.V brought into being to do just this.7 Having laid a brief but thorough introduction to the Corporation and the factors which made its establishment a necessity, the writer wishes to state that the Corporation and its modalities for achieving its aims will be thoroughly addressed in Chapters Three and Four.
Having said this, it must be noted that the primary interest here is the issue of the banks in distress at the time the Corporation was established. They are the following banks; Oceanic Bank, Union Bank, Intercontinental Bank, Bank PHB, Afribank, Equatorial Bank and Spring Bank. Some factors led to the distressed state of these banks.
One of them was poor management shown in the fact that the CBN Governor, Sanusi Lamido Sanusi eventually sacked the Managing Directors and Executive Directors of the above eight banks. Then, there was the issue of non-performing loans and state loans given out by the Managing Directors to their cronies.

Closely linked to the above is the staggering corruption inherent in the system. Several erstwhile Managing Directors have been or are being tried including Cecilia Ibrru of Oceanic bank and Dr. Erastus Akingbola of Intercontinental Bank.
The distressed state of these banks was also a consequence of the global economic recession but they were hit the worst. The state of these banks had not improved much as at December 2010 when the CBN released the following table:-
Oceanic Bank 94,261
Union Bank 135,894
Intercontinental Bank 330,709
Bank PHB 242,309
Afribank 260,940
FinBank 104,751
Equitorial Bank 27,253
Spring Bank 87,869
Subsequently, the Corporation has intervened time and time again. Eventually, it has gone on to acquire Afribank, Bank PHB and Spring Bank. The two have consequently been renamed – Mainstreet Bank, Keystone Bank, and Enterprise Bank, respectively.
8 C.B.N “Public Statement On The Recapitalization Of Eight Nigerian Banks”, Pages 5,6

At this juncture, it must be stated that the Corporation, since its establishment, has not been a docile body. It has continuously striven aggressively to correct the anomalies inherent in our financial system vis-à-vis the banks in distress.
As at January, 16th 2011, Tell Magazine report showed that the Corporation had already invested about N3.14 trillion so far in the purchase of non-performing loans and recapitalization of banks.
There are of course many criticisms (to be stated in due course) but it is an indisputable and indeed, unassailable fact that at the moment, there is no Nigeria bank at the verge of collapse. That is mainly due to the work of the Corporation.
Therefore, the Managing Director of the Corporation, Mr. Mustapha Chike-Obi must be commended and encouraged to continue working tirelessly to reach the el dorado of financial security, sanctity and stability in the Nigerian financial system.
1.2. Definition of Terms:
1. Acquisition – The gaining of possession or control over something.9
2. Appraisal – A judgment of the value, performance or nature of somebody or something. 10
9B. A Garner, Black’s Law Dictionary 7th Edition, West Publishing Company, 1999, Page 24
10 Sally Wehmeier, Oxford Advanced Learner’s Dictionary, 6th Edition, Oxford University Press, 2001,Page 46

3. Asset Acquisition – Acquisition of a corporation by purchasing all its assets directly from the corporation itself, rather than by purchasing shares from its shareholders. 11
4. Assets – An item that is owned and has value.12
5. Authorized Share Capital – the share capital of a company at any given time.13
6. Bailout – A rescue of an entity from financial trouble.14
7. Bank – A financial establishment for the deposit, loan, exchange or issue of money and for the transmission of funds.15
8. Bad Bank- a financial institution created to hold non-performing assets owned by a state-guaranteed bank.16
9. Bridge Bank – Temporary bank organized by the regulators (C.B.N and N.D.I.C) to administer the deposits and liabilities of a failed bank.17
10. Distress-Suffering and problems caused by not having enough money.18
11. Eligible Bank Assets – Assets of eligible financial institutions specified by the C.B.N Governor as being eligible for acquisition by the Corporation.19
11 B. A Garner, op. cit., Page 114
12 ibid., Page 112
13 Company and Allied Matters Act, Cap. C 20 L.F.N 2004, Sect. 567
14 B. A Garner, op. cit., Page 137
15 ibid., Page 139
16, 16th May,2012
17 bank (Nigeria), 16th May,2012
18 Sally Wehmeier, op. cit., Page 339
19 A.M.C.O.N Act 2010, Sect. 61.

12. Eligible Financial Institution – A bank duly licensed by the Central Bank of Nigeria to carry on the business of banking in Nigeria under the Banks and Other Financial Institutions Act.20
13. Financial Institution – A business, organization or other entity that manages money, credit or capital such as a bank... 21
14. Insolvent – Having liabilities that exceed the value of assets; having stopped paying debts in the ordinary course of business or being unable to pay them
as they fall due. 22
15. Liquidate – To close a business and sell everything it has in order to pay debts.23
16. Liquidity – The quality or state of being readily convertible to cash.24
17. Non-Performing Loan – An outstanding loan that is not being repaid.25
18. Recapitalization – An adjustment or recasting of a corporation’s capital structure through amendment of the articles of incorporation or merger with
a parent or subsidiary.26
19. Resolution – The act of solving or settling a problem.27
20. Resuscitate – to restore consciousness, vigour or life.28
20 Supra
21 B.A Garner, op. cit., Page 644.
22Ibid., Page 799.
23 Sally Wehmeier, op. cit., Page 691.
24 B.A Garner., op. cit., Page 942.
25Ibid., Page 947. 26Ibid., Page 1274.
27 Sally Wehmeier, op. cit., Page 1001.
28, 9th June 2012.

21. Tainted Eligible asset – Assets including loans, credits or other financial accommodation obtained in breach of certain rules.29
29 A.M.C.O.

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