…Bank loses operating licence to corporate governance failure
Heritage Bank, which rose from the ashes of Societe Generale Bank of Nigeria, may have lost its licence to poor corporate governance.In announcing the withdrawal of its bank operations, the Central Bank of Nigeria (CBN) accused the board management of failure to improve the financial health of the bank.
The Acting Director of Corporate Communications of the CBN, Hakama Sidi Ali, who disclosed this in Abuja yesterday, said: “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.”
The apex bank stated that the step became necessary due to Heritage 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.”
Meanwhile, the Nigeria Deposit Insurance Corporation (NDIC) said it has started the process of liquidating the failed bank with immediate verification and payment of the insured deposits.
The NDIC, in a statement, said following the revocation of the banking license the Corporation has commenced the liquidation process with verification and payment of insured deposits to the bank depositors.
It said depositors of the bank that have alternate accounts within the industry will be paid up to the insured amount of N5 million per depositor using their Bank Verification Number (BVN) to locate their alternate account.
Depositors with funds over N5 million will be paid liquidation dividends upon realisation of the bank’s assets and recovery of debts owed to the bank.It charged all depositors of the defunct bank without an alternate bank account in the industry to visit the nearest branch of the bank with proof of account ownership, verifiable means of identification such as a driver’s licence, permanent voter’s card, National Identity Card, together with their alternate account and Bank Verification Number (BVN) for the verification of their deposits and subsequent payment of insured sums.
The Corporation also charged debtors who are yet to complete the repayment of loans to contact the Corporation’s Asset Management Department (AMD). In the meantime, the House of Representatives has assured Nigerians, particularly depositors and stakeholders of Heritage Bank that the development will not affect them.
Reacting, House spokesman, Akin Rotimi, in a statement said the green chamber was committed to carrying out its constitutional oversight functions to ensure that this development does not negatively impact Nigerians.
Rotimi maintained that the relevant House Committees on Banking Regulations; and Insurance will be up to their duty, thoroughly examining the circumstances surrounding this decision and the subsequent steps taken by the NDIC. He said the priority of the lawmakers is to safeguard the interests of all depositors and maintain the stability of the financial system.
He stressed the need for the CBN and NDIC to establish clear channels of communication to allay the fears of the public and prevent any loss of trust in Nigeria’s financial system.
“We will engage with the CBN, NDIC, and other relevant stakeholders to ensure a transparent and orderly resolution process, providing necessary support to mitigate any potential negative impact on the public”, he added.
