Nigeria - AMCON Declare N 2.37 Trillion Loss In 2012

Nigeria's state-backed "bad bank" AMCON reported a 2.37 trillion naira ($15 billion) loss on Friday, exposing the scale of financial devastation wrought by a 2009 banking crisis to be deeper than first thought.
The surprisingly large loss also raised questions about how AMCON will refinance a 1.7 trillion naira zero-coupon bond at the end of 2013, and may have implications for the Nigeria's national budget.

The after-tax loss - which AMCON officials revealed at a news conference - comes in the first accounts to be published by the bad bank since it was set up in 2010 to absorb the debts of banks hamstrung in a crisis caused by over exposure to a weak oil and local stock market in 2008-09.

The crisis nearly sank nine lenders until the central bank intervened with a $4 billion bail out fund to keep them afloat.

The loss was a "wake-up call" that the banking sector's problems will not be resolved as easily as first thought and that banks may end up paying a higher contribution towards its resolution, said Razia Khan, head of Africa research at Standard Chartered Bank.

"The non-performing loans that we bought were four times larger ... which shows you that what was disclosed as NPLs (non-performing loans) on the books of the banks were (below) what we found when they started selling to us," said AMCON Executive Director of Finance Mofoluke Dosumu.

"We bought four times what we initially envisaged."

Analysts questioned how AMCON's losses would impact its ability to repay a total of 4.5 trillion naira government-backed bonds used to clean up the banking sector if the value of the assets it hold continued to erode and whether the sinking fund will be sufficient in the short-term.

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