Nigeria to invest N679 billion into three nationalised banks

Nigeria's government is planning to invest ?679 billion ($4.5bn, £2.8bn) into three banks that were nationalised last week. The country's Central Bank took control of Afribank, Bank PHB and Spring Bank following a realisation that it was unable to raise fresh capital they required.

Control of the three banks has now passed to the State-run Asset Management Corporation of Nigeria (AMCON). It is thought that the company is aiming to raise the funds needed through bond issues. AMCON has also appointed new management to oversee the three banks.

The company released a statement saying: "The newly appointed boards are entrusted with the mandate to manage these banks along best commercial practice, to compete effectively in the Nigerian banking sector and provide quality service to customers…Depositors are again assured that their deposits are safe and employees are also assured of seamless continuity of business operations and job functions."

Trading in the shares of Afribank, Spring Bank and Bank PHB has been suspended.

Sources: BBC News, Reuters, Bloomberg

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

Nigeria: AMCON delays the floating of N1.5 trillion bond issue

The Asset Management Corporation of Nigeria (AMCON) has delayed its planned floating of the N1.5 trillion bond issue because it is yet to receive the required waivers and approvals from the Ministry of Finance and the Debt Management Office (DMO).

AMCON had previously planned to float the fully trade-able N1.5 trillion bonds, which is to replace the N1.03 trillion-worth consideration bonds issued to 21 commercial banks in December 2010, on Monday 31st January.

AMCON's managing director, Mustapha Chike Obi, explained that the bond issue had to be postponed until 28th February because of “procedural issues”. He further explained that the waivers sought are to enable AMCON issue the trade-able bonds as a new company and the necessary exemptions from the Securities and Exchange Commission (SEC).

Obi also stated that AMCON still has plans to issue an extra N500 billion to soak up the remaining Non Performing Loans (NPLs) from other banks when retiring the consideration bonds this month. AMCON's main term of reference is to buy up all the bad debts and NPLs in Nigeria's banking industry in order to properly reposition the country's ailing financial industry.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2010 Menas Associates

Nigeria: CBN raises benchmark rate

The Central Bank of Nigeria's (CBN's) Monetary Policy Committee (MPC) has raised the Monetary Policy Rate (MPR), which is the benchmark interest rate for the country, by 25 basis points, to 6.5 percent from 6.25 percent. The bank explained that the increase in the benchmark rates was a proactive measure, aimed at hedging against inflationary trends and controlling excess liquidity in the system occasioned by spending on election campaigns, government spending and fund injections by the Asset Management Corporation of Nigeria (AMCON). AMCON is in the process of buying up all the non-performing loans and toxic assets of the rescued banks.

The MPC also raised the Cash Ratio Rate (CRR) from 1 per cent to 2 per cent, effective from 1st February, and the Liquidity Ratio (LR) by 500 basis points, from 25 per cent to 30 per cent, effective from 1st March.

CBN Governor Lamido Sanusi explained that the tightening measures to curb inflation were taken because the country's economy had underperformed despite the favourable conditions and notwithstanding recent stabilisation of price inflation.

Sanusi also seized the opportunity to reiterate his view that the payment of federal subsidies on petroleum products is unsustainable and a constraint on the development of the country's refineries.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.


© 2010 Menas Associates