Soaking up Nigeria’s bad bank loans could cost the country’s planned Asset Management Company (AMC) N1 trillion ($6.75 million) but much of that figure would be recovered, Central Bank governor, Sanusi Lamido Sanusi, had said.

Speaking on the operating of the Nigeria Economic Summit, Sanusi said stimulating economic growth was his main priority and that monetary expansion was “not that much of a concern”.

“At the last MPC (meeting) we did say inflation was a risk. At that point of time risks showed it was time for tightening”, Sanusi said in Abuja.

“Now our primary concern is to ensure the economy does not go into recession and to stimulate growth. It is not to put on the brakes”, he said.

Legislation to form an AMC which would exchange bad bank loans for government bonds is before the National Assembly.

The aim of AMC is to free up banks’ balance sheets to allow them to lend again and stimulate the economy following a $4 billion banking sector bailout.

Sanusi expressed optimism that the bill will be passed, but has other option should they fail to do so.

We have a number of options including government taking equity if the AMC bill doesn’t pass. But it will pass”, Sanusi told The Tide source  in Abuja, adding he would be meeting top lawmakers.

We hope to pass it to the House before the end of December 2009, with parliament taking it back up on January 5,” he said on the sidelines of the economic summit.

Sanusi had said he hoped legislation would be in place by the end of the year to set up the AMC.

The central bank injected N400 billion into Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank on August 14 and sacked senior executives after its auditors found Lax governance had left them dangerously undercapitalized.

Less than two months later it said it was providing N200 billion to four more bank PHB, Equatorial Trust Bank, Spring Bank and Wema Bank also judged to be facing a grave liquidity risk.

The businesses are being run as going concerns until new investors can be found to recapitalize them.

The new management teams at some of the nine banks, have found the balance sheets are in even worse shape than revealed by the central bank examination which led to the bailout.

Analysts say the depth of write-downs at the reasoned banks revealed in their financial statements to the end of September highlights the urgent need for an asset management firm to soak up bad loans.

The National Assembly is already debating bills including restructuring the mainstay oil sector and electoral reforms with the end-of-year holiday starting on Friday, analysts have questioned how quickly the bill can be passed.