Asset Management Corporation of Nigeria, AMCON, weekend, reported a N2.37 trillion naira ($15 billion) loss after tax, three years after it was set up to absorb the bad debts of banks in the aftermath of a financial crisis.
AMCON also said it expects to conclude the privatisation of the three banks nationalised by mid-2014.
It added that Nigerian banks had agreed to increase their collective contributions to a post-crisis "sinking fund" used to refinance the bank's bad debts to 100 billion naira, up from the 60 billion naira they had already put in.
The surprisingly large loss also raised questions about how AMCON will refinance a 1.7 trillion naira zero-coupon bond at the end of 2013, and may have implications for Nigeria's national budget.
The after-tax loss, which AMCON officials revealed at a news conference, comes in the first accounts to be published by the bad bank since it was set up in 2010 to absorb the debts of banks hamstrung in a crisis caused by over-exposure to a weak oil and local stock market in 2008/2009.
The crisis nearly sank nine lenders until the Central Bank of Nigeria intervened with a four billion dollars bail-out fund to keep them afloat.
The loss was a "wake-up call" that the banking sector's problems will not be easily resolved and that banks may end up paying a higher contribution towards its resolution, said Razia Khan, Head of Africa Research at Standard Chartered Bank.
Speaking on the report, AMCON Executive Director of Finance Mofoluke Dosumu, said: "The non-performing loans that we bought were four times larger.
"This shows that what was disclosed as NPLs (non-performing loans) on the books of the banks were below what we found when they started selling to us. We bought four times what we initially envisaged."
Analysts questioned how AMCON's losses would impact its ability to repay a total of 4.5 trillion naira government-backed bonds used to clean up the banking sector if the value of the assets it holds continued to erode and whether the sinking fund will be sufficient in the short-term.
Meanwhile, AMCON said it had recovered 85 billion naira worth of bad loans and it expected to make more recoveries.
Chief Executive, Mustapha Chike-Obi, said he was confident the "bad bank" will be able to refinance its bonds at maturity next year and it could also choose to retire them using the proceeds of its sinking fund.
Chike-Obi said Nigerian banks had agreed to increase their collective contributions to a post-crisis "sinking fund" used to refinance the bank's bad debts to 100 billion naira, up from the 60 billion naira they had already put in.
It also expects to conclude the privatisation of three banks it nationalised after the crisis, by mid-2014, which would bring in some money, Chike-Obi said.