The Central Bank of Nigeria (CBN) has revoked the banking licence of Heritage Bank Plc with immediate effect, citing persistent financial instability and breaches of regulatory requirements. This decisive action is part of the CBN’s ongoing mandate to maintain a sound financial system in Nigeria, as outlined under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.

In a press release issued on Monday, the CBN disclosed that Heritage Bank had consistently failed to adhere to Section 12 (1) of BOFIA 2020, necessitating regulatory intervention. Despite multiple supervisory measures prescribed by the CBN to mitigate the bank’s declining financial performance, Heritage Bank has been unable to improve its financial health.

“The Central Bank of Nigeria (CBN), in accordance with its mandate to promote a sound financial system in Nigeria and in the exercise of its powers under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020, hereby revokes the licence of Heritage Bank Plc with immediate effect,” the CBN stated. “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. 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 emphasized that this action is crucial to reinforce public confidence in the Nigerian banking sector and to ensure the integrity and soundness of the financial system.

NDIC Appointed as Liquidator

In line with Section 12 (2) of BOFIA 2020, the Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the liquidator of Heritage Bank. Customers of the bank may receive up to N5,000,000 in payment from the NDIC, depending on the total deposits held with the bank, based on the recently adjusted maximum deposit insurance coverage levels across various banks.

Background on Heritage Bank

Heritage Bank Plc began its operations in Nigeria as a regional bank on March 14, 2013, acquiring the license and structure of the old Societe Generale Bank of Nigeria. Societe Generale had been closed down by the CBN in January 2006 for failing to meet capital requirements. In October 2014, Heritage Bank acquired the defunct Enterprise Bank, inheriting over 160 branches and numerous ATMs and POS terminals, thus transforming into a national bank.

Recent Challenges

Last year, the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) threatened to mobilize its affiliate trade unions to picket the head office of Heritage Bank due to alleged wrongful termination and failure to settle severance benefits for more than 30 former employees.

Additionally, the International Monetary Fund (IMF) noted that three commercial banks in Nigeria, including Heritage Bank, had been placed under a special supervisory regime by the CBN due to their inability to meet capital requirements.

The revocation of Heritage Bank’s licence marks a significant step in the CBN’s efforts to ensure financial stability and protect the interests of depositors in Nigeria.

Credit: Nairametrics