20100803
reuters

LAGOS (Reuters) - A number of potential investors in Nigeria's rescued banks have completed due diligence but uncertainty over how the state's "bad bank" will value non-performing loans could slow the sale process, banking sources said.

Nigeria's central bank invited bids last November for nine weakly capitalised lenders rescued months earlier in a $4 billion bailout, and said it would set up an asset management company to take out bad loans and make the banks saleable.

Asian and South African banks as well as U.S. private equity firms have shown interest in the finanical institutions, banking sources said on Tuesday. Central Bank Governor Lamido Sanusi had said he hoped to announce some deals in July or August.

However, the bad bank, Asset Management Company of Nigeria (AMCON), has taken longer than anticipated to form. It was signed into law only last month.

Even though many potential investors have carried out due diligence, uncertainty remains over how AMCON will price the bad loans, banking industry sources said.

"The major worry in the market today is how AMCON will value these non-performing assets. Is it going to take the assets at mark to market, at a premium or a discount?" said Anthony Orororo, head of research at Future View Financial Services.

"Any investor that wants to buy into these banks has to know what AMCON is going to do," he said.

The central bank determines the guidelines for the valuation and pricing of eligible assets but they must be loans secured by collateral and on the lender's books at least 30 days before August 14, 2009, according to the new AMCON law.