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Union , Oceanic, 6 other banks for sale Oct

By Omoh Gabriel, Business Editor with Agency report
LAGOS—RESCUED banks, Union, Oceanic, Intercontinental, Finbank, Afribank, Bank PHB, Equitorial Trust and Spring banks may be sold to local and foreign investors between September and October this year.

CBN Governor, Sanusi Lamido Sanusi, said in London, yesterday, that they may be sold to local and foreign banks as well as equity funds, which have indicated interest through the submission of bids.

According to Reuters’ report, the bids for the rescued banks will be opened in September or October 2010.
Sanusi was quoted as saying that he expected bids for the rescued banks by the end of July.  He said: “We expect the bids by the end of July from local banks, foreign banks and private equity firms. The bulk of them are local; there are four international banks. The results of the bids would be released by September or October.”

The CBN governor said in the report that he saw no reason to raise interest rates, days before a monetary policy committee meeting, but that he was concerned about the risk of another asset bubble forming.

Sanusi also said that four international banks were among the likely bidders for the banks rescued last year in a N620 billion bail-out. The monetary policy rate has been held at six per cent for a year despite double-digit inflation as the Central Bank strives to stimulate growth in the wake of last year’s banking crisis. He told reporters on the sidelines of the conference: “We see no compelling reason to raise rates.”

The Central Bank’s monetary policy committee is due to meet on Monday. It warned in May that an expansionary budget and the soaking up of bad bank loans could pose inflationary risk later in the year.

Sanusi described headline inflation of around 11 percent in May as “relatively stable,” adding that he expected foreign investment in the country to rise as investors bet on rising oil prices, increased oil production, and improved regulation of the banking sector, but cautioned this could lead to another asset bubble building up.

He said: “My concern is we get this tremendous inflow from everyone who thinks markets are going to go back up. There is basically a high risk of money flowing to capital markets. How much of that is recovery and how much is a bubble being formed, that’s a concern.”

Last year’s banking crisis was largely the result of an asset bubble caused by banks lending heavily to stock market traders and oil distributors and then finding themselves dangerously undercapitalised when the markets turned against them.

Central Bank’s top priority has been to restore the health of the rescued banks by taking bad loans off their books and finding new investors to recapitalise them. The National Assembly last week approved legislation to create Asset Management Corporation of Nigeria, AMCON, a “bad bank” which will buy up non-performing loans in exchange for government bonds, but the bill needs final presidential approval.

Sanusi said: “The presidential bill is a formality. We expect it to be transmitted to the presidency this week and hopefully we can get a sign-off as early as next week.”


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