Second phase of Nigeria bank reforms starts

“The true narrative is that this is a narrative of corruption, the story of Nigeria,” Sanusi said.

“Corruption fights back. I’m under no illusion as to the power of the people we are fighting ... but I am ready. We can delay that day I go into exile if more people chip in and fight back,” he told the conference, to a round of applause.

Sanusi said regulatory shortfalls, including at the central bank, had allowed liquidity to flow into capital markets at the expense of the real economy in the run-up to last year’s crisis.

He said the central bank would pursue a “hybrid” monetary policy with the twin aims of targeting single-digit inflation -- at 12 per cent in December -- and seeking to avoid a repeat of the sort of asset bubble which led to last year’s bank crisis.

He said the central bank had received expressions of interest for all of the banks rescued in last year’s bailout, including three or four from foreign investors.

Legislation would be passed in coming weeks to create an asset management company to recover bad bank loans, Sanusi said.

He said the company would need 1 trillion naira ($6.6 billion) to buy up all the bad loans in the system, adding around 0.2 percent per annum to the budget deficit, and would recover around half that amount.

Soaking up bad loans in the rescued banks is key to making them attractive for new investors to recapitalise them.

Sanusi also said he was awaiting presidential approval for tax relief aimed at helping the development of the fledgling corporate bond market, which will enable banks to raise cheaper long-term funds and engage in longer-term lending.