Reps Charge CBN On Thorough Probe Of Heritage Bank Management

The House of Representatives has urged the Central Bank of Nigeria (CBN) to conduct a thorough investigation of the leadership and management of Heritage Bank to identify any possible issues of mismanagement or wrongdoing that might have contributed to the bank’s failure.

The Green Chamber also called for amendment of the Nigeria Deposit Insurance Corporation Act to increase the minimum amount of funds that is insured by the organisation to save depositors the agony they go through.

It equally urged the federal government to establish a robust and well-funded depositors’ protection fund to provide greater financial security and assurance for depositors in the event of bank failures, and to facilitate timely and fair compensation for affected depositors.

These resolutions followed the adoption of a motion of urgent public importance moved by

Hon. Uchenna Harris Okonkwo from Anambra State at plenary on Tuesday.

Moving the motion, Okonkwo recalled that on June 3, 2024, CBN publicly declared the revocation of Heritage Bank’s licence, citing its violation of Section 12 (1) of the Banks and Other Financial Institutions Act (BOFIA), 2020 and  designated the Nigerian Deposit Insurance Corporation (NDIC) as the entity responsible for overseeing the liquidation process;

He said NDIC has initiated the liquidation process of Heritage Bank Plc in accordance with Section 55, sub-sections 1 and 2 of the NDIC Act 2023 and swiftly commenced the liquidation procedures of the failed bank, prioritising immediate verification and disbursement of insured deposits to the bank’s depositors.

The lawmaker noted that the NDIC has initiated the liquidation process, which regrettably limited the verification and payment of depositors to a maximum insured amount of only N5 million.

According to him, the NDIC, in its statement dated June 3, 2024, has specified that depositors with funds surpassing N5 million will receive liquidation dividends only after the realisation of the bank’s assets and the retrieval of debts owed to the bank.

Okonkwo informed that: “Some depositors allegedly entrusted significant sums, amounting to in excess of N10 billion only, to Heritage Bank, representing their hard-earned savings and financial security, this realisation underscores the magnitude of the financial losses and uncertainties they are now facing, highlighting the profound impact of the bank’s failure on their lives and well-being;

“Amidst the prevailing economic challenges in Nigeria, the financial stability of its citizens has been significantly compromised, limiting compensation to N5 million is deeply inadequate to alleviate the substantial losses experienced by depositors who had placed their trust in Heritage Bank, exacerbating their financial distress and uncertainty.”

He expressed concern about the CBN’s failure to promptly disclose the financial instability of Heritage Bank, which has left depositors vulnerable to unexpected financial losses, saying this lack of transparency has not only eroded public trust in the banking system and regulatory bodies but has also intensified the distress and uncertainty faced by depositors who relied on the bank for their financial security.

“Further deeply concerned by allegations suggesting that the CBN had prior knowledge of the bank’s deficiencies for an extended period but failed to enact timely corrective measures, this underscores the pressing need for a thorough review of regulatory oversight mechanisms, as it is unjust for depositors to suffer the consequences of regulatory inaction,” the lawmaker maintained.

Adopting the motion, the House tasked the Committee on Banking Regulations on promoting public awareness and education campaigns to inform citizens about the risks associated with banking and the importance of diversifying their financial holdings.