On Heritage Bank’s Liquidation

Following the revocation of the license of Heritage Bank,  the Nigeria Deposit Insurance Corporation (NDIC) has commenced the payment of the insured deposit of the depositors o the bank even as shareholders call for the investigation of the management and board of the bank.

The CBN had on Monday, June 3, 2024 announced the revocation of the license of the bank due to the bank’s breach of Section 12 (1) of BOFIA, 2020. “The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability.

“This follows a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline. Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby making the revocation of the license the next necessary step.” The CBN stated in a press statement.

Consequently, the NDIC had announced plans to pay out insured deposit within one week. According to the Managing Director and Chief Executive of the corporation, Mr. Bello Hassan, 2.3 million depositors of Heritage Bank are to be paid approximately N650 billion.

The NDIC Managing Director explained that the majority of Heritage Bank’s depositors, 99.9 per cent, have less than N5 million in their accounts. This means the NDIC expects to process these insured deposits swiftly.

There are about 4,000 depositors with more than N5 million in their accounts. Before losing its license, Heritage Bank had issued over N700 billion in loans. To manage the payment process, NDIC has deployed 400 staff members across the bank’s 116 branches and regional offices.

Meanwhile, minority shareholders community are calling for a probe of the management and directors of Heritage Bank. National Coordinator of Progressive Shareholders Association, Boniface Okezie said probing the bank managers would boost confidence in the sector.

Noting that CBN is also part of the problem in the system, he said “If the bank had been insolvent over the years and they had been living under the mercy of CBN, which should have taken action. In all this, what is the role of AMCON? They should have taken over the bank after all, the bank was also paying a levy to AMCON. Instead, CBN has directed NDIC to take over for liquidation. Is that the way to go?

“Besides, is it only Heritage Bank that is insolvent? What is the fate of some other banks in the sector? Are they strong and viable? They should tell us. The management should be called for questioning. Those who ran the bank aground should be called for questioning. It is not enough that NDIC should liquidate.”