House of Reps passes asset management bill
The House of Representatives on Tuesday unanimously approved legislation to create an asset management company to soak up bad bank loans.
Nigeria's central bank wants to set up the asset management company (AMC) to buy up bad bank loans in exchange for government bonds in order to free up banks' balance sheets and get them lending again after a $4 billion bailout last year.
"A bill for an act to establish the Asset Management Corp. of Nigeria for the purpose of efficiently resolving the non-performing loan assets of banks ... has passed," said Bayero Nafada, deputy speaker of the House of Representatives.
The Senate is expected to vote on the bill in the next few weeks.
The AMC would be jointly funded by the central bank and finance ministry and be valued at 10 billion naira, according to draft legislation seen by Reuters in December. The final version of the bill passed by the House was not immediately available.
The nine banks rescued last year made provisions for loan losses of more than 2.2 trillion naira by the end of September.
The central bank wants new investors to recapitalise them but they are unlikely to do so until those bad loans are off their books.
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