By Vincent Nwanma - Aug 8, 2011
Nigeria will inject 679 billion naira ($4.5 billion) into three banks nationalized by the government two days ago in a further step to restore stability in the banking system of Africa’s biggest oil producer.

The funds will be raised through bond sales today and paid to the banks, Mustafa Chike-Obi, managing director of Asset Management Corp. of Nigeria, said in a phone interview from Lagos today.

Amcon, as the state-owned company is known, took over Afribank Plc, Bank PHB Plc (PLATINUM) and Spring Bank Plc (SPRINGBK) on Aug. 6 after the central bank revoked their licenses a day before because they were unlikely to meet a Sept. 30 deadline to recapitalize. This action is the latest by the Central Bank of Nigeria, led by Governor Lamido Sanusi, to clean up the banking industry after the global financial crisis led to about $10 billion of toxic debts on lenders’ books.

“The nationalizations bring to an intermediate end a sorry chapter in Nigeria’s recent banking history,” Sebastian Spio- Garbrah, managing director of New York-based DaMina Advisors LLP, a frontier-market risk adviser, said in an e-mail to clients today. “Nigeria’s banks today are safer than many” in developed countries, he said.

Amcon

Nigeria’s banking stocks fell for a 10th consecutive day. The Bloomberg NSE Banking (NGSEB10) Index, which tracks the performance of the 10 biggest banks by market capitalization, dropped 4.4 percent to 314.51 by 11:18 a.m. in Lagos.

Amcon, which was set up by the government to buy the bad debt of banks, assured depositors on Aug. 6 they won’t lose their money. New boards of directors were appointed for the lenders, which were renamed Mainstreet Bank Ltd., Keystone Bank Ltd. and Enterprise Bank Ltd. respectively.

In 2009, Sanusi fired the chief executives of eight of the country’s 24 lenders after a debt crisis threatened the industry with a collapse, and injected 620 billion naira to rescue lenders. The crisis was triggered after the oil prices tumbled and the benchmark stock index slumped 34 percent in 2009.

“Amcon’s remit just got much larger,” Olubunmi Asaolu, head of equity research at FBN Capital Ltd., said in a note to clients today. “In addition to trying to recover bad loans, it also has to manage three rescued banks for three years after which it hopes to sell them.”

New Boards

Amcon yesterday appointed Jacob Ajekigbe, a former managing director of First Bank of Nigeria Plc, as chairman of Keystone Bank and Oti Ikomi as managing director, it said in an e-mailed statement. Falalu Bello was named chairman of Mainstreet Bank, with Faith Tuedor-Matthews the managing director. Emeka Onwuka, a former managing director of Diamond Bank Plc, was appointed chairman and Ahmed Kuru managing director of Enterprise Bank.

The injection into the new banks will raise their capital adequacy ratio to the required 15 percent and enable them to repay the capital provided by the central bank in 2009, Chike- Obi said on Aug. 6.

The Securities and Exchange Commission suspended the shares of Afribank, Bank PHB and Spring, it said in an e-mailed statement yesterday.

The steps taken these past two days mark an end to Nigeria’s financial crisis, central bank Deputy Governor Kingsley Moghalu said on Aug. 6. All banks in the country will be adequately capitalized by Oct. 1, and “all the major systemic” challenges would have been resolved by the end of the year, he told reporters in Lagos.

“Although we welcome the fact that the curtains are finally coming down on this saga which has been ongoing for the best part of two years, the fact that two of the largest rescued banks ended up being nationalized is disappointing,” Asaolu said.

http://www.bloomberg.com/news/print/2011-08-08/nigeria-to-inject-4-5-billion-into-three-banks-nationalized-on-saturday.html

Is he printing naira again to inject this $4.5 billion?

Err, nm. My question answered in the post.

Answer: Of course.  So we ended up bailing out banks too,
but unlike the US, we didn't leave them under competent managers.

Those who owed these banks have they paid back?