Nigeria's Central bank has liquidated 26 banks because of debts totalling nearly $400m. The banks had failed to meet a deadline which expired in December to recapitalise or face closure. The liquidation is part of a crackdown by the current military government on malpractices in the banking sector as Hilary Andersson reports from Lagos.

13 merchant banks and another 13 commercial banks have been liquidated after failing to meet the deadline to put their houses in order. First they were given until March last year to recapitalise, and later the deadline was extended to December.

They've been shut down with almost $400m in outstanding debts. The bank liquidator, the Nigerian Deposit Insurance Corporation, has only got about half the funds necessary to pay back depositors, many of whom have almost given up hope of ever seeing their money again.

The liquidation of the 26 banks is part of a campaign started by the country's military leader, General Sani Abacha, four years ago when he came to power, to clean up the banking sector. He set up the Failed Banks Tribunal which last year investigated and imprisoned many bankers who could be seen, business suits and all, clustered in the squalid conditions of a Lagos detention centre. Some fled abroad to escape arrest.

The banking sector has long been riddled with fraud, with bankers lending themselves huge sums of money and using the banks as a private source of funds for their own business ventures.