ABUJA (Reuters) - Nigeria's House of Representatives on Thursday unanimously approved legislation to create an asset management company to soak up bad bank loans.
Nigeria's central bank has lobbied heavily for the establishment of the asset management company (AMC), which will buy up non-performing loans in exchange for government bonds in order to free up banks' balance sheets.
With bad loans off their books, banks are more likely to resume lending in sub-Saharan Africa's second-biggest economy, where credit has been tight since last year's bail-out of nine poorly-capitalised lenders.
The bill must now be approved by the Senate, which is adjourned until June 22, before it can be submitted to President Goodluck Jonathan to be signed into law.
Under the harmonised bill, the toxic assets would be exchanged for seven-year bonds or other debt instruments issued by the AMC and guaranteed by the finance ministry. The AMC's value will be 10 billion naira.
