Nigeria's state asset management firm AMCON has signed an agreement to take over three nationalised banks that failed to recapitalise after a $4 billion bailout in 2009, its chief said on Saturday. AMCON was set up last year to absorb bad bank loans, exchanging them for government-backed bonds, with the aim of rebuilding commercial bank balance sheets.

"The primary objective is to stabilise the banking system ... AMCON will now supervise the management of these banks," AMCON head Mustapha Chike-Obi told reporters at a conference in the commercial hub Lagos.

Amcon, as the state-owned company is known, took over Afribank Plc, Bank PHB Plc (PLATINUM) and Spring Bank Plc (SPRINGBK) on Aug. 6 after the central bank revoked their licenses the day before, saying they were unlikely to meet a Sept. 30 deadline to recapitalize. This action is the latest by the Central Bank of Nigeria Governor Lamido Sanusi to clean up the banking industry after the global financial crisis led to about $10 billion of toxic debts on lenders’ books.

The central bank deputy governor said recapitalisation agreements signed with investors by four of the other rescued banks would solve around 80 percent of the banking crisis.

Nigeria will inject 679 billion naira ($4.5 billion) into three banks nationalized by the government two days ago in a further step to restore stability in the banking system of Africa’s biggest oil producer. The cash injection into the new banks will raise their capital adequacy ratio to the required 15 percent and enable them to repay the capital provided by the central bank in 2009, The funds will be raised through bond sales today and paid to the banks, Mustafa Chike-Obi, managing director of Asset Management Corp. of Nigeria, said by phone from Lagos.

“The Nigerian Stock Exchange has placed the shares of the affected banks on full suspension as a first step towards their delisting from the Daily Official List,” the bourse said today in a statement on its website. This means that no trading will occur in the shares of these banks as they “no longer exist following the revocation of their licenses.”

Amcon, which was set up by the government to buy the bad debt of banks, assured depositors on Aug. 6 they won’t lose their money. New boards of directors were appointed for the lenders, which were renamed Mainstreet Bank Ltd., Keystone Bank Ltd. and Enterprise Bank Ltd. respectively.

Amcon appointed Jacob Ajekigbe, a former managing director of First Bank of Nigeria Plc, as chairman of Keystone Bank and Oti Ikomi as managing director, it said in an e-mailed statement. Falalu Bello was named chairman of Mainstreet Bank, with Faith Tuedor-Matthews the managing director. Emeka Onwuka, a former managing director of Diamond Bank Plc, was appointed chairman and Ahmed Kuru managing director of Enterprise Bank.

The Nigeria Labour Congress (NLC) has said the Central Bank of Nigeria (CBN) should share in the blame for the crises which led to last week's acquisition of Bank PHB, Spring Bank and Afribank.

NLC President, Comrade Abdulwahed Omar, said this was because the interim managers who were appointed by the CBN failed to revive the fortunes of the banks although he conceded that the reasons given for the takeover of the banks seemed plausible.

Omar, in a statement made available to THISDAY in Abuja Tuesday, queried the guarantee being offered that the bridge banks floated by the CBN through the Asset Management Corporation of Nigeria (AMCON) would not suffer the same fate.

He called for measures to be put in place to protect depositors' funds and workers in the affected banks as well as attempts to redress the plight of shareholders some of whom are poor Nigerian working people.

He again called for more vigilance by all stakeholders in the banking sector while calling for a rooting out of the issue of falsification of financial records for narrow gains and make-believe profits.

This move many believe will help strenghten Nigeria's banking sector.