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At last, the much-awaited Asset Management Corporation of Nigeria bill has been signed into law setting thestage for the restoration of confidence in the nation’s financial system withtrickle down effects on borrowers, the stock market and of course, banks’balance sheets.

Key economic players have said that the AMCON should have come much sooner, given the hugeimpact of the “unintended consequences” of the Lamido Sanusi’s Tsunami that sawthe exit of several bank chief executives last year and the virtual takeover ofdistressed banks by the Central Bank of Nigeria.

While the general consensus still is that the banking sector shake up was necessary to avert awholesale collapse of the banking system, the unsavoury fallouts including thebanking sector job losses and a credit freeze with severe impact on businessescould have been largely mitigated.

Nonetheless, the purchase of banks’ toxic assets following huge loan loss provisions – AMCON’sprimary purpose - will amount to a breath of fresh air badly needed in ourbanking halls and expansion of money supply, but the huge cash infusion may notbe immediate since the toxic asset will be exchanged for government bondsredeemable at the CBN repo window.

In any case, the banks do not appear to be short of cash, with deposit rates at an all time low.With the toxic assets cleared and risk of defaulting on statutory liquidity andcapital adequacy ratios reduced, banks will able to increase lending and veryimportantly the capital market is likely to see a bull run going forward andinvestor confidence rises.

Both President Goodluck Jonathan and Sanusi expressed optimism that AMCOM will constitute theend phase of the resolution of the banking sector crises and usher in a newdawn in the banking sector.

However, the asset management company could face legal challenges arising from dispute overvaluation of assets. This possibility Sanusi has acknowledged, and the way togo round this might be to buy the assets at premium relative to current prices,but ultimately, success of AMCON would lie in its management.

One hopes that the lessons learnt in the past 11 months will not be lost both on the regulators,which must address their deficiencies and the financial sector players, whomust rise above mere profit motive in shaping their behaviour.