Vanguard (Lagos)

2 February 2011

Nigeria: Four Rescued Banks to Sign MoU On Re-Capitalisation

Abuja — Four of the nine banks rescued in a $4 billion bailout two years ago are expected to sign agreements with new investors over recapitalisation this month, Central Bank Governor Lamido Sanusi said, Wednesday.

The CBN rescued the nine lenders in 2009 after auditors deemed them to be so weakly capitalised they posed a risk to the whole system. It has since sought new investors to recapitalise them and set up Asset Management Company of Nigeria, AMCON, to help in the process by absorbing their bad loans.

"In the next four weeks, we expect four of them to sign memoranda of understanding with their new investors," Sanusi said, adding two of them were expected to conclude negotiations in the next two weeks.

Afribank, Bank PHB, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank have all held talks with potential investors in recent months.

Some of the lenders could end up downscaling to become regional banks, which have lower minimum capital requirements than national or international players, bankers have said. The rescued lenders also include privately-held Equitorial Trust Bank, Spring Bank and Wema Bank, which has already said it would restructure into a regional bank.

The head of AMCON has said the banking crisis would be resolved by the middle of 2011. Mustapha Chike-Obi said Monday AMCON was on track to absorb bad loans by the end of March and resolve the banking crisis by the end of June.

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