LAGOS, (Reuters) – Nigeria’s central bank said yesterday it was injecting 400 billion naira ($2.6 billion) into  five banks and removing their senior management because their  undercapitalisation posed a risk to the banking system.

Governor Lamido Sanusi said Afribank, Finbank,  Intercontinental Bank, Oceanic Bank and Union Bank would be run  as going concerns until new investors were found to recapitalise  them.

The move by Sanusi, who took over at the helm of the central  bank just over two months ago pledging to sanitise the banking  system, sent shockwaves through the financial establishment.

Between them the institutions account for 40 percent of  banking sector credit in Africa’s most populous nation and the  executives removed included members of Nigeria’s corporate  aristocracy, long seen as almost untouchable.

“The banks have lost their money in bad loans. We have put  in money. We have questions about the management, so we have put  in new management,” Sanusi told a news conference in Lagos.

“We assure every depositor that no-one will lose money and  we will continue to support the banks and all Nigerian banks,”  he said, as armed police secured the premises of the five  institutions in an effort to ensure their assets were protected.
Nigeria’s financial sector has become the key driver of  sub-Saharan Africa’s second biggest economy and a systemic  banking crisis would be disastrous.

Private sector credit outstripped the entire spending of the  country’s federal, state and local governments last year and  this year banks are expected to provide much of the government’s  estimated 1.6 trillion naira ($10.6 billion) borrowing needs.