Nigeria: Government clears up bad bank loans

Jan 13, 2011

Nigeria's state asset management company (AMCON) has announced that it will issue an additional 500 billion naira ($2.59 billion) in zero-coupon bonds.

A total of 21 Nigerian banks have already transferred loans they want to dispose of to AMCON, in exchange for bonds of a total value of one trillion naira.

The move follows a ruling from the Senate, which last November gave AMCON the green light to start managing $10 billion of toxic assets on banks' balance sheets.

"We are going to clear up everything by March 31st and at that point we would have issued proper bonds", Head of AMCON Chike Obi told the Reuters news agency.

AMCON was set up to help recapitalise lenders that benefited from a government bailout following the 2009 economic crisis.

Nigeria's government hopes to attract new investments in banks and boost loans to businesses and consumers, in a bid to stimulate growth.