Page last updated at 14:23 GMT, Monday, 17 August 2009 15:23 UK

Shares suspended in Nigeria banks

Nigerian currency
The five banks supply 40% of Nigeria's bank credit

Shares in five Nigerian banks, which were bailed out by the government last week, have been suspended.

Afribank, Intercontinental Bank, Finbank, Oceanic Bank and Union Bank shared in a 400bn naira ($2.6bn; £1.6bn) injection.

The value of shares in the banks tumbled after the bailout and the sacking of the banks' bosses - prompting trading to be stopped.

Bank bailouts were unheard of in Nigeria until last week's development.

Finally it seems the authorities have grasped the nettle and tackled the problems in the banking system
Stuart Culverhouse, Chief economist, Exotix

'Near-term uncertainty'

Central bank governor Lamido Sanusi had said the banks would be run as normal until new investors were found. However, investors are believed to have asked for trading in the shares to be halted.

The five institutions, which account for 40% of bank credit in Nigeria, had run up bad loans worth a total of 1.14 trillion naira ($7.6 billion).

The country's banking regulator said the banks were undercapitalised and posed a risk to the entire banking system. Audits on a further 14 banks are planned.

Analysts welcomed the intervention by the central bank to inject funds and oust the chief executives.

"Finally it seems the authorities have grasped the nettle and tackled the problems in the banking system," said Stuart Culverhouse, chief economist at London-based brokerage Exotix.

"We will see some near-term uncertainty in the naira as the scale of the problem is probably bigger than this, but it's a positive move. I do not think people will expect it to affect the whole system."

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