Big news in the banking sector: “The Central Bank of Nigeria, CBN, in accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of the Banks and Other Financial Act (BOFIA) 2020, hereby revokes the licence 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.
“… 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.
“The Nigeria Deposit Insurance Corporation (NDIC) is hereby appointed as the Liquidator of the bank in accordance with Section 12 (2) of BOFIA, 2020.
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“We wish to assure the public that the Nigerian financial system remains on a solid footing. The action we are taking today reflects our continued commitment to take all necessary steps to ensure the safety and soundness of our financial system.” – Central Bank of Nigeria.
Things must have been really bad in this bank that the apex bank did not decide to change the management and keep the bank operating. For years, that has been the model: replace the management, bring a new team, and offload the mess to AMCON, the government’s bad debt buying company. With this suspension of license, there is indeed a new model.
Now, the message is loud and clear: no bailout by AMCON for bad behaviour. Nonetheless, the apex bank should protect 100% of depositors’ funds and allow the funds to be accessible as quickly as possible.
What a world of business: some banks are declaring record profits, one has died because it is unable to execute!
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Was Heritage Bank even alive before now? About two years ago that I visited one of its branches to process a transaction, it was already looking like what was in life support back then. So, whatever ailment it had has been troubling it for quite some time, and the CBN finally decided to unplug the oxygen host. Nothing to salvage there, just move depositors funds to where they can access it from and notify them accordingly. RIP to HB.