Nigeria's state asset management company said on Monday it was set to start the second round of non-performing loan purchases from the banking sector and was on track to soak up all bad credit by the end of next month.
The Asset Management Company of Nigeria (AMCON) was set up last year to absorb bad bank loans in exchange for government bonds in order to rebuild lenders' balance sheets after a $4 billion bailout in 2009.
AMCON issued three-year zero-coupon bonds with a face value of 1.03 trillion naira to 21 lenders in December in exchange for non-performing loans (NPLs), paying out a discounted total of 770 billion naira, in the first round of the purchases.
It is now set to soak up remaining bad loans of 20 million naira and above by March 31. It has said it plans to issue a further 500 billion naira in bonds to complete this.
"We are sending out notices tomorrow in which we would invite the healthy banks to submit non-performing loans with a face value of 20 million naira (and above)," chief executive Mustapha Chike-Obi said in a telephone interview.
He said AMCON was on track to recapitalise the nine lenders rescued in the 2009 bailout by the end of June, as planned.
"I have two hard deadlines... the end of first quarter for taking out all the NPLs and the end of second quarter for recapitalising the banks," he told Reuters.
Chike-Obi said AMCON had received all necessary regulatory approvals to issue fully tradeable bonds by the end of March.
The bonds it has issued so far have been consideration bonds pending the approvals and will now be converted to listed debt.