By Ademola Alawiye with agency report

Tuesday, 25 Jan 2011

The Central Bank of Nigeria has said that it intends to complete the process of recapitalising the Deposit Money Banks that failed its joint stress test with the Nigeria Deposit Insurance Commission by the middle of the year.

Reuters quoted the Governor of CBN as saying, “The CBN aims to complete the process of recapitalising the eight commercial banks it rescued from collapse in 2009 by the middle of the year.”

Sanusi added that at least four banks would complete Memorandums of Understanding with new investors within the next few weeks.

The CBN had sacked eight managing directors of the banks in 2009, and bailed out the industry with N620bn ($4.1bn) following a debt crisis triggered by defaults on loans to buy shares.

The CBN had set-up the Asset Management Corporation of Nigeria, a state-owned company, to buy bad debts from the banks.

AMCON had purchased debts valued at N1.04tn from 21 of the country’s 24 banks.

The Managing Director, AMCON, Mr. Mustafa Chike-Obi, had said that AMCON would sell N1tn ($6.5bn) of consideration bonds and would use the proceeds to buy debts arising from the banks’ non-performing loans.

Chike-Obi said, “Our estimate of the amount of loans we will be buying in this first phase is in the neighbourhood of between N800bn and N1tn. And we are pleased to say that, from the submissions we‘ve received, we are in that range.

“It is important to note that the amount we are paying for these loans is different from the face value of the loans. The aggregate face value of those loans is about N2.2tn. We are buying them at an appropriate price of between N800bn and N1tn.”

 

Source: Punch