The Central Bank of Nigeria (CBN) announced on Monday the revocation of Heritage Bank Limited’s operating license with immediate effect.
In a statement issued by Mrs. Hakama Sidi Ali, the CBN’s acting Director of Corporate Communications, the apex bank stated that the action was in line with its mandate to promote a sound financial system in Nigeria, exercising its powers under Section 12(1) of the Banks and Other Financial Act (BOFIA) 2020.
Meanwhile, the Nigerian Deposit Insurance Corporation (NDIC) visited several Heritage Bank branches on Monday morning as discussions regarding a distress resolution takeover gained momentum.
NDIC officials were seen at the Victoria Island, Allen Avenue, Ilupeju, and Ladiopo branches of the bank, presenting a memo indicating they were on a “special assignment.” The officials declined to comment on the memo or provide any details.
The special assignment is linked to a distress resolution and takeover of Heritage Bank. The Banks and Other Financial Institutions Act (BOFIA) mandates the Central Bank to transfer significantly or critically under-capitalized banks to the deposit insurer for distress resolution.
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A Heritage Bank spokesperson did not immediately respond to a request for comment. Heritage Bank’s high indebtedness has been public for five years, with significant coverage of the erosion of its capital base.
In December 2023, there were reports that Heritage Bank failed a stress test, prompting the Central Bank to ask the financial institution to seek strategic investors to aid its recapitalization.
Meanwhile, the NDIC has stated that it has initiated the liquidation process of the bank following the revocation of its banking license by CBN. In a press statement issued on Monday by Bashir Nuhu, the Director of Communication & Public Affairs at NDIC, the Corporation noted that depositors are protected, and the NDIC is currently verifying to pay customers of the bank up to N5 million, depending on their deposits.
The NDIC noted that the revocation of the banking license and the subsequent liquidation are pursuant to Section 12(2) of the Banks and Other Financial Institutions Act (BOFIA) 2020.
The agency also stated that the verification and payment process for insured deposits comply with Section 55, subsections 1 and 2 of the NDIC Act 2023.
Depositors with alternate bank accounts within the industry will receive payments up to the insured limit of N5 million per depositor.
This process will utilize the Bank Verification Number (BVN) to locate these alternate accounts, facilitating a smooth and efficient transfer.
For depositors who do not have an alternate bank account, the NDIC advised such customers to visit the nearest Heritage Bank branch with proof of account ownership and a verifiable means of identification, such as a driver’s license, permanent voter’s card, or National Identity Card, along with their BVN. This will allow for the verification of their deposits and the subsequent payment of insured sums.
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Additionally, depositors can file claims online by visiting the claims page of the NDIC website. Creditors of Heritage Bank are instructed to visit the nearest bank branch to file their claims or use the online platform. The NDIC assured that the process for creditor payments will begin immediately after all depositors have been compensated.
Debtors with outstanding loans are advised to contact the Corporation’s Asset Management Department (AMD) to arrange repayments.
The decision to liquidate the bank is part of the CBN’s mandate to maintain a sound financial system in Nigeria, as outlined under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
The CBN disclosed that Heritage Bank had failed to adhere to Section 12(1) of BOFIA 2020, which necessitated regulatory intervention.
Despite multiple supervisory measures prescribed by the CBN to mitigate the bank’s declining financial performance, Heritage Bank has been unable to improve its financial health.
The bank’s continuous underperformance poses a significant threat to financial stability, compelling the CBN to revoke its license.
