UPDATE 2-Nigeria anti-graft police recover $170 mln bad loans

* Police recover $170 mln out of $5 bln bad debts

* Dozens of debtors being interrogated

* Charges to be brought soon against bank executives

(Adds breakdown of sums recovered and bail conditions)

By Nick Tattersall

LAGOS, Aug 27 (Reuters) - Nigerian anti-corruption police said on Thursday they had so far recovered 25.57 billion naira ($170 million) in bad loans owed to five banks bailed out this month and pledged to prosecute their chiefs "very soon".

Agents from the Economic and Financial Crimes Commission (EFCC) have been hunting defaulting debtors, including some of Nigeria's most powerful tycoons, who the central bank says owe 747 billion naira ($5 billion) in non-performing loans.

An EFCC deadline to pay up or face arrest, prosecution and the possible seizure of assets expired on Tuesday.

"In line with my promise to go after debtors who failed to take advantage of the seven-day ultimatum ... our operatives have since commenced the arrest of defaulters and have made significant recoveries," EFCC chairman Farida Waziri said.

She said 16 executives from the five banks were in EFCC custody, while 68 debtors were being interrogated. She said charges would be brought "very soon" against the bank chiefs, but gave no further details.

Erastus Akingbola, the former chief executive of Intercontinental Bank INBK.LG, is the only one of the five banks' former chief executives not to have been detained. Local newspaper reports have said he has left the country.

"He is the only one who has escaped justice so far but we will bring him back through the interpol system," Waziri said, adding that charges would be brought "very soon" against the bank chiefs, without giving further details.

The EFCC granted bail to two of the former bank chiefs -- Sebastian Adigwe of Afribank AFRB.LG and Okey Nwosu of Finbank FIBP.LG -- after they secured court orders.

The anti-corruption agency said the case against the two suspects involved sums of more than 30 billion naira individually and set bail at one billion naira each.

CRIMINAL CHARGES

The central bank injected $2.6 billion into Afribank, Finbank, Intercontinental Bank, Oceanic Bank OCBK.LG and Union Bank UBNP.LG on Aug. 14 and sacked their senior management, saying lax governance had left them so weakly capitalised that they posed a systemic risk.

The EFCC has so far recovered 8.0 billion naira owed to Oceanic Bank, 7.7 billion to Intercontinental, 7.6 billion to Afribank, 1.6 billion to Finbank and 659 million to Union Bank.

Waziri said EFCC investigators had divided the borrowers into two categories -- those with legitimate business intentions who continued to service their loans, and those whose loans did not follow due process and are non-performing.

"We are not out to criminalise legitimate borrowing from banks," she said.

"(But) it is unfortunate that some of the bank chiefs in trouble at present abused their offices by granting unsecured loans in total disregard of banking regulations to the second category of people."

Analysts say criminal charges could be brought if bank executives are found to have falsified accounts or breached share price manipulation rules by setting up subsidiaries as vehicles to trade their own stock and push up the share price.

The EFCC has said some of the loans were sought using false names, disbursed without approval from the boards of the banks, and in some cases diverted to ventures other than those for which they had been sought.

It has said some defaulters could be prosecuted as conspirators with the banking executives. (For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/ ) (Reporting by Nick Tattersall; Editing by Randy Fabi)