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Last Updated: Monday, 16 January 2006, 22:24 GMT
Nigeria closes 'unhealthy banks'
President Obasanjo of Nigeria
President Obasanjo is getting tough on corrupt banks
A dozen Nigerian banks have had their licences revoked after failing to prove they have sufficient resources to survive under new government rules.

The government has applied for a court order to have the 14 banks liquidated.

Banks must now hold minimum financial reserves of 25bn naira ($190m; 110m), compared with 2bn naira previously.

The new rules - part of sweeping reforms to banking - are intended to bolster a system which saw regular bank failures and corruption in the 1990s.

Backed by President Olusegun Obasanjo, the restructuring is also designed to attract more foreign investment to Nigeria.

Fewer banks

The reforms have led to a series of mergers and takeovers as businesses tried to build up sufficient financial reserves to escape sanctions.

The number of banks operating in Nigeria has shrunk from 89 to 25 as a result of the process.

We have decided to take some decisive steps
Charles Soludo, Governor of the Central Bank of Nigeria

However, 14 companies failed to comply with the 1 January deadline imposed by the Central Bank of Nigeria to raise their capital threshold.

The Bank said on Monday that the reforms had weeded out "unhealthy" banks that had been tainted by poor performance, weak governance and corruption.

"In the interest of the credibility of the reform agenda, and in the interest of the general public, we have decided to take some decisive steps," Bank governor Charles Soludo said.

Mr Soludo insisted that the deposits held by the banks were safe, guaranteeing that they would be paid in full.

Depositors were left out of pocket in the 1990s when a host of banks collapsed without warning.

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