The Senate has moved to ensure that commercial banks in the country were made to contribute annually an amount equivalent to 50 basis points of their respective total assets to the Resolution Cost Fund.
The Resolution Cost Fund is an agreement between the Central Bank of Nigeria (CBN) and the commercial banks as proposed in Section 65 of the Asset Management Corporation of Nigeria Act, 2010 Amendment bill, 2014, presently before the National Assembly.
The decision was made known in the Senate President’s address delivered by the Majority Leader, Senator Victor Ndoma-Egba, while declaring open a one-day public hearing organised by the Senate Committee on Banking, Insurance and Other Financial Institutions on the bill yesterday in Abuja.
Ndoma-Egba said: “Although AMCON believes that it is positioned to meet its obligations arising from the debt securities issued by it from its various sources of income, the Resolution Cost Fund will act as an additional safety net.”
The Senate said the Fund, if established, would ensure that any future banking resolution costs, which may arise as a result of any financial mismanagement by the banks, would not be borne by taxpayers, but rather by the banks with money from the Fund.
Earlier, Chairman of the Committee, Senator Bassey Otu, said the establishment of AMCON as a Special Purpose Vehicle was conceived as part of a policy option for executing the on-going reforms in the banking industry in the country.
He said such policy option had a focus to “recapitalise the intervened banks through feeding up their balance sheets and providing liquidity to these banks to create new risk assets, as well as reducing their debt overhangs, and facilitating their ability to extend credit and lending to the real economy.”