In line with its mandate to promote a sound financial system in Nigeria, the Central Bank of Nigeria (the “CBN”) on 14 June 2017 released a circular titled “Exposure Draft of the Framework for Licencing, Regulation and Supervision of Private Asset Management Companies in Nigeria”. The circular sets out the regulatory framework for the establishment, licensing, regulation, management and supervision of companies registered under Nigerian law, that will be eligible to purchase non-performing loans or classified assets from financial institutions and specialized institutions such as the Asset Management Company of Nigeria (the “Framework”).
The negative impact on risk assets within the financial industry as a result of a decline in international commodity prices necessitated a framework for the licencing of PAMCs to complement the activities carried out by the Assets Management Corporation of Nigeria. The draft Framework sets out the scope of permissible activities and requirements for the establishment of a PAMC. It also gives the CBN unrestricted access to the records of all licenced PAMCs.