Central Bank of Nigeria Governor, Lamido Sanusi

The Central Bank of Nigeria (CBN) is looking at splitting commercial banking from investment banking.

CBN Governor Lamido Sanusi revealed this in an interview with CNBC Africa yesterday.

"I'm a strong believer in separating commercial and investment banking," Sanusi said.

He told the channel that he doesn't think banks should use depositors' funds for proprietary trading, private equity and venture capital. The CBN is going to establish guidelines to make sure depositors' funds are kept safely.

Sanusi added that guidelines for margin lending are also needed but that the practice would not be stopped completely.

On the sale or merging of Nigeria's distressed banks, the governor expects to have made a lot of progress by April this year.

"Part of what we want to do is make sure that we have the Asset Management Company (AMC) Bill approved because dealing with the toxic assets and bringing in some capital to the balance sheets of the banks is an integral part of this process," Sanusi explained.

"These banks have big holes. We cannot expect anybody who is going to merge with them to absorb that hole. And if we sold them as they were, we would have to sell them for a nominal value and the shareholders would loose everything," the governor said.

According to Sanusi the CBN's principal interest is not so much in banks that can bring in money to the troubled institutions but in those that, in addition to money, can bring in good governance. Poor corporate governance and bad risk management practices have been at the heart of Nigeria's banking problems.