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Banking

Nigeria: State firm buys $15 billion of Nigeria’s bad debt

All Nigerian banks to benefit; Banks contribute to sinking fund

Nigeria’s new bad bank announced last month that it would purchase non-performing loans from all local lenders and not just the nine banks that were rescued through a $4 billion government bailout last year.

The announcement follows the $14 billion listing of Dangote Cement at the end of October, which boosted the Nigerian equity market’s overall capitalization by a third. But bank share prices remained stable as investors appeared unsure how the state’s new bad bank, whose board was approved last month, would improve liquidity.

South Africa’s Standard Bank circulated a press release from the Asset Management Corporation of Nigeria (Amcon) in mid-November stating that Amcon’s board had approved the purchase of loans totalling more than N2.2 ­trillion ($14.7 billion), some $5 billion more than expected. Amcon, which will be headed by former Goldman Sachs banker Mustafa Chike-Obi, aims to complete the transactions by December 30.

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