Nigerian banks announce NGN1.5tn funding for bad debt company
Lenders and the Central Bank will pump NGN1.5 trillion into the Asset Management Corporation of Nigeria over the next ten years, which is expected to reduce the likelihood of Nigerian banks failing.Investment worth NGN1.5 trillion (€7.8 billion) is to be set aside for the newly-formed Asset Management Corporation of Nigeria. The Central Bank of Nigeria and lenders from throughout the country have announced they will fund the company, which has been established with the aim of buying bad debts in the banking sector.
Some NGN500 billion will be financed by the Central Bank, with other institutions contributing the rest, according to Chief Executive Officer of Access Bank Plc Aigboje Aig-Imoukhuede. He added the risk of banks going bust in the future has been negated by the measure.
"This step reduces the likelihood that a Nigerian bank will fail. What [Asset Management Corporation of Nigeria] does is give the financial system a new lease of life," he explained. The company is thought to be essential to restoring confidence and lending in the country, after the 2009 financial crisis nearly brought the industry to its knees.
President Goodluck Jonathan approved a bill proposing the corporation's formation on July 19th, highlighting his hopes the measure will help to stabilise Nigeria's economy.