In a decisive move, the Central Bank of Nigeria (CBN) has revoked the banking license of Heritage Bank Plc, effective immediately.
The apex bank’s action comes in response to Heritage Bank’s prolonged inability to improve its financial performance, which has posed a significant threat to the stability of Nigeria’s financial system.
The apex bank’s action comes in response to Heritage Bank’s prolonged inability to improve its financial performance, which has posed a significant threat to the stability of Nigeria’s financial system.
The announcement was made on Monday by Sidi Ali, the Acting Director of the Corporate Communication Department of the CBN.
According to Ali, despite numerous supervisory measures and engagements to stabilize the bank’s financial health, Heritage Bank’s management has failed to reverse the decline.
This failure left the CBN with no option but to take this drastic step to protect the broader financial ecosystem and maintain public confidence.
“The Nigerian financial system remains on a solid footing,” Ali stated. “We are committed to ensuring the safety and soundness of our financial system, and this action reflects that commitment.”
The CBN has appointed the Nigeria Deposit Insurance Corporation (NDIC) as the liquidator of Heritage Bank, in accordance with the Banks and Other Financial Act (BOFIA) 2020. This move underscores the CBN’s determination to safeguard depositors’ funds and ensure the stability of the financial sector.
The CBN’s statement elaborated on the reasons behind the revocation: “The Central Bank of Nigeria (CBN), following its mandate to promote a sound financial system in Nigeria and exercise of its powers under Section 12 of the Banks and Other Financial Act (BOFIA) 2020, hereby revokes the license of Heritage Bank Plc with immediate effect.
This action has become necessary 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.”
The CBN detailed the efforts made to save the bank: “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.
Consequently, the CBN has taken this action to strengthen public confidence in the banking system and ensure that the soundness of our financial system is not impaired.”
With the NDIC now in charge of the liquidation process, the CBN has assured the public that the overall health of Nigeria’s financial system will not be affected by this development.
The NDIC’s role will be crucial in managing the assets and liabilities of Heritage Bank, aiming to mitigate any potential negative impacts on the bank’s customers and the wider financial market.
The revocation of Heritage Bank’s license is seen as a significant step by the CBN to uphold the integrity and stability of the financial sector.
By taking this action, the CBN reinforces its commitment to proactive and decisive regulation, ensuring that the financial institutions within Nigeria operate within the bounds of financial prudence and stability.
While the closure of Heritage Bank marks a notable event in Nigeria’s banking history, the measures taken by the CBN and the appointment of the NDIC as the liquidator are aimed at ensuring that the country’s financial system continues to function smoothly and efficiently, safeguarding the interests of depositors and maintaining public trust.
