Two of Nigeria’s nine rescued banks are in talks with foreign investors about recapitalisation but most of the others are more likely to be taken over by local rivals, banking sources said on Thursday.
Sub-Saharan Africa’s second-biggest economy rescued nine lenders deemed to be dangerously undercapitalised in a $4 billion bailout last year. The central bank has been trying to find new investors to help recapitalise them since then.
Nigeria has set up a state-run asset management company (AMCON) to help absorb up to 2.2 trillion naira of bad bank loans, but this will only bring the rescued lenders back to zero shareholder funds.
“AMCON will do the non-performing loan purchase but after that there will still be a hole, and that hole will have to be filled through mergers,” one senior banking source said.
Banking sources said two of the lenders — Bank PHB and Union Bank — were in talks with foreign investors.
Four more are talking to local banks, one has raised funds and will scale down to survive, while two others have yet to find potential suitors, the sources said.
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