Banks · Act VII — Sanusi's Audit and AMCON

On 3 June 2009, Lamido Sanusi Lamido was sworn in as CBN Governor. Within six weeks he had commissioned a Special Joint Examination of all twenty-four post-consolidation banks (Spring Bank was already in NDIC hands) by examiners from the CBN and the NDIC. The findings, announced on 14 August 2009, were that ten banks were in grave condition — capital eroded, liquidity ratios below regulatory minimum, non-performing-loan ratios in some cases above 40%. The cause, the audit established, was the margin-loan complex of 2006–2008: banks had lent to private clients who used the proceeds to buy shares in the same banks during the post-consolidation rights issues, then collateralised the loans with the same shares. When the NSE All-Share Index fell from 66,371 (March 2008) to 21,813 (March 2009), the collateral evaporated and the loans went bad. Total NPLs exposed: roughly ₦1.7 trillion, or about 27% of the system's loan book.

A particular kind of bad loan. The Sanusi audit was not a story of broad-based lending gone wrong — it was a story of a very narrow concentration. The bulk of the ₦1.7tn sat in three buckets: margin loans against NSE-listed shares (the largest single category, badly impaired once the index lost two-thirds of its value); oil-and-gas trading loans to traders stranded when Brent collapsed from US$147 to US$33 between July 2008 and February 2009; and a smaller pool of related-party and insider credits to directors and their nominees. The borrowers were not Nigerian households or small businesses — household and SME lending was already negligible (see The Credit Vacuum). They were a small set of high-net-worth individuals and trading houses in an eighteen-month window. AMCON was built to clean up that specific mess, which is why its mandate, pricing methodology and bond structure all assume large, identifiable, recoverable corporate exposures rather than diffuse retail risk.

On 14 August 2009 Sanusi sacked the CEOs of five banks (Intercontinental Bank — Erastus Akingbola; Oceanic Bank — Cecilia Ibru; Union Bank — Bartholomew Ebong; Afribank — Sebastian Adigwe; FinBank — Okey Nwosu). Three more (Spring, Equitorial Trust, Bank PHB) followed in October 2009. Eight CEOs in three months — the only mass removal of sitting bank chief executives by a Nigerian regulator. The CBN injected ₦620 billion in Tier-2 capital into the eight banks (then equivalent to about US$4.1 billion) and replaced their boards.

The Asset Management Corporation of Nigeria (AMCON) was established by the AMCON Act 2010 (signed 18 July 2010) as the resolution vehicle. Between October 2010 and December 2011 AMCON purchased eligible non-performing loans from twenty-two banks at an aggregate face value of about ₦4.02 trillion for a discounted consideration of roughly ₦1.76 trillion, paid for with AMCON-issued zero-coupon bonds guaranteed by the Federal Government. By 2013 AMCON had stabilised the system; by 2024 it had recovered roughly ₦1.6 trillion of the original outlay — and a residual obligation that the Federal Government still services.

Three of the eight rescued banks were eventually resolved by sale of bridge-bank successors: Intercontinental was absorbed into Access Bank (2011); Oceanic became part of Ecobank Nigeria (2011); Afribank, Bank PHB and Spring were nationalised as Mainstreet, Keystone and Enterprise bridge banks and sold off in 2013–2015. Cecilia Ibru pleaded guilty in October 2010 to a three-count charge of credit-extension violations and forfeited assets worth roughly ₦191 billion — the largest plea-bargain recovery in Nigerian financial history. Erastus Akingbola was tried in London and Lagos and acquitted at first instance; the EFCC's appeal was still pending at the time of his 2019 retrial. The Sanusi audit, the ₦620bn injection and AMCON together cost the public purse the equivalent of three years of the federal capital budget. But the system did not collapse — and that, in a country with the 1990s distress crisis in living memory, was the achievement.