Heritage Bank Liquidation Begins as NDIC Steps In
The Nigerian Deposit Insurance Commission (NDIC) has commenced the liquidation of the beleaguered Heritage Bank, beginning with the verification and payment of depositors’ funds. This move follows the Central Bank of Nigeria’s (CBN) decision to revoke the bank’s license, citing severe financial underperformance and threats to overall financial stability.
In a statement on Monday, the CBN, through its Acting Director of Corporate Communication, Sidi Ali, explained the rationale behind the revocation. “This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020. Despite various supervisory steps and engagements by the CBN to curb the decline, the bank has shown no reasonable prospects of recovery, making license revocation the next necessary step.”
As the appointed liquidator, the NDIC, in a statement signed by Director of Communication & Public Affairs Bashir Nuhu, assured depositors that they would receive up to N5 million each. “Depositors with alternate accounts within the banking industry will be paid up to the insured amount of N5 million per depositor using their Bank Verification Number (BVN). Those with funds exceeding N5 million will receive liquidation dividends upon the realisation of the bank’s assets and recovery of debts,” Nuhu stated.
For depositors without alternate bank accounts, the NDIC advised visiting the nearest Heritage Bank branch with proof of account ownership and identification for verification and subsequent payment of insured sums. Creditors of the bank are also instructed to file their claims, either in person or via the NDIC’s online platform.
The NDIC emphasized its commitment to the safety of depositors’ funds in all licensed banks, urging the public to continue their banking activities without fear, as banks with intact licenses remain secure.
Sector Reactions and Support
The Bank Customers Association of Nigeria has expressed support for the CBN’s decisive action. Speaking to The PUNCH, Dr. Uju Ogubunka, President of the association, highlighted the potential systemic risks posed by a failing bank. “The CBN’s decision is necessary to protect the integrity of the entire banking system. By allowing one failing institution to collapse, it prevents broader systemic issues,” Ogubunka noted.
Similarly, Professor of Capital Market Uche Uwaleke commended the CBN’s proactive stance. “Revoking Heritage Bank’s license is a crucial step towards maintaining financial system stability. The NDIC’s role in the liquidation process will be vital in safeguarding depositors and employees.”
The House of Representatives has pledged to oversee the process, ensuring depositors’ interests are protected. In a statement, House spokesman Akin Rotimi confirmed the legislative body’s commitment to engaging with all relevant stakeholders. “The House will ensure that this development does not negatively impact Nigerians, focusing on a transparent and orderly resolution process,” he said.
Next Steps and Implications
With the NDIC at the helm of the liquidation, attention now shifts to the execution of the process. The House Committee on Banking Regulations, chaired by Mohammed El-Rufai, will closely monitor the situation. “Our priority is to protect depositors’ rights and ensure transparency and accountability throughout the liquidation,” El-Rufai affirmed.
Ahmed Jaha, Chairman of the Committee on Insurance and Actuarial Matters, echoed these sentiments, emphasizing the importance of maintaining public confidence in the financial sector. “We will diligently oversee the NDIC’s execution of its mandate, ensuring depositors’ funds are secure,” Jaha stated.
As Heritage Bank’s liquidation proceeds, the focus remains on maintaining stability within Nigeria’s banking sector and ensuring that depositors are protected amidst this significant upheaval.
