Nigeria gets ‘bad bank’ law

The president of Nigeria, Goodluck Jonathan has signed into law a new legislation creating an asset management company to soak up bad bank loans, the Reuters has reported citing central bank governor, Lamido Sanusi Lamido.

He told the news service on Monday that the president has just signed the asset management bill into law, and the law takes immediate effect.

The central bank has lobbied heavily for the establishment of the Asset Management Corporation of Nigeria (AMCON), which will buy up non-performing loans in exchange for government bonds in order to free up banks’ balance sheets.

The Nigerian banking system was hit by a debt crisis compelling the governor to sack CEOs of five banks last year.

The governor subsequently injected 400 billion naira ($2.6 billion) into the banks.

While in Ghana in November 2009, Lamido told the Ghanaian media that “There is no banking crisis in Nigeria.”

He indicated that there has not been a crisis in Nigeria in the sense that depositors have lost their funds.

“We haven’t had a crisis in Nigeria, because the crisis would have meant depositors lost their monies, or banks defaulted on their debts or subsidiaries collapsed, I don’t think we have had a crisis because there were no such occurencies,” he said.

He said what the central bank did was to audit the banks to identify problems to pre-empt what could have been a banking crisis. He said bank executives who were found to have broken the law were handed over to the law enforcement agencies for prosecution.

By Emmanuel K. Dogbevi

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