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LAGOS, June 28 (Reuters) - Nigeria’s central bank said on Monday it was extending to the end of September a deadline for the recapitalisation of Wema Bank and Unity Bank, two of the lenders bailed out last year in a $4 billion rescue.
The central bank granted the extension because it had taken longer than expected to establish the Asset Management Company of Nigeria (AMCON), a “bad bank” meant to soak up non-performing loans and help recapitalise the rescued banks.
“Due to the unanticipated three month extension in the timeline for setting up AMCON, the central bank has granted a three-month extension for the two banks to recapitalise,” the regulator said in a statement.
“It is our hope that with the progress made so far, the two banks should be recapitalised by the end of September 2010 through the combination of sale of toxic assets to AMCON and injection of fresh capital,” it said.
The previous deadline for the two banks to recapitalise had been the end of June.
Wema Bank said a month ago it planned to raise 49 billion naira ($325 million) through a special placement with foreign and local investors and was confident it could recapitalise before the original deadline. [ID:nLDE64O1NH]
Wema swung to a 795 million naira pre-tax profit in the first quarter from a 2.0 billion naira loss a year earlier.
Unity Bank said last month it had cut its 2009 pre-tax loss by 1.3 percent on the previous year to 21 billion naira.
Legislation to create AMCON has been passed by parliament and sent to the president for approval. It aims to buy up bad bank loans in exchange for government bonds in order to free up banks' balance sheets and get them lending. (For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/ ) (Reporting by Randy Fabi; Writing by Nick Tattersall)