The CBN has released an exposure draft of the Framework for Licensing, Regulation and Supervision of Private Asset Management Companies (the “Framework”). The Framework seeks to set out rules for the establishment and operations of Private Asset Management Companies (“PAMCs”) in Nigeria.
PAMCs are to complement the role of the Asset Management Corporation of Nigeria in the management of non-performing assets of banks. Thus, they will be able to among other things (a) acquire, hold, manage, realize and dispose eligible assets and the underlying collaterals of such eligible assets belonging to banks and OFIs, (b) acquire non-performing loans of banks and other financial institutions, (c) invest in securities and own subsidiaries with CBN’s approval, (d) purchase and sell eligible assets from and to other PAMCs, and (e) carry on such other activities that may be prescribed by the CBN from time to time.
PAMCs, however, cannot (a) provide to or accept credit from customers, (b) provide guarantee(s) for loans, (c) provide fund management services to third parties, (d) engage in sale and buy-back of eligible assets of banks and other financial institutions, and (e) carry on any other business that may be prohibited by the CBN from time to time.
Although individuals and entities (including foreigners) may invest in PAMCs subject to CBN’s approval, Nigerian banks, financial holding companies, other financial institutions and their subsidiaries are not permitted to do so. Further, no individual can serve on the board of two PAMCs at the same time and no board member or officer of a Nigerian bank, financial holding company and their subsidiaries is permitted to serve on the board of a PAMC.
A copy of the Framework is available on the download page below.