Regulatory Alerts2017-06-14 | FPR/DIR/GEN/CIR/06/021Exposure Draft of the Framework for Licensing, Regulation and Supervision of Private Asset Management Companies in Nigeria
The Central Bank of Nigeria (CBN) has issued a framework for the establishment and regulation of Private Asset Management Companies (PAMCs). PAMCs are expected to help manage non-performing loans and other distressed assets of eligible financial institutions, such as banks. This includes purchasing non-performing loans, providing advisory services on risk management, and handling liquidation or dissolution of the financial institutions in question. To establish a PAMC, companies must obtain an approval-in-principle (AIP) from the CBN before applying for a license. Key requirements include having a minimum paid-up share capital of NGN 500 million ($1.27 million), submitting a detailed business plan and business model, maintaining a diversified portfolio of assets, and appointing experienced professionals on its board. PAMCs are also required to submit periodic returns to the CBN, including details about their operations, transactions, and financial condition. They must ensure that the licenses of the financial institutions they work with are current and valid, and report any irregularities or suspicious activities to the CBN immediately. If a PAMC fails to meet its obligations or violates the terms of the license, the CBN may revoke its license within three months. This includes submitting false information, engaging in unauthorized activities, ceasing operations without approval, or being involved in any activity that constitutes a valid ground for license revocation under the BOFIA (Banking and Other Financial Institutions Act). In summary, this framework outlines the roles, responsibilities, and regulations governing PAMCs as they work to manage and resolve distressed assets within Nigeria's financial industry.