…NDIC takes over the bank, begins liquidation process

In a decisive move, the Central Bank of Nigeria (CBN) has revoked the licence of Heritage Bank Plc, marking the end of the bank’s struggle to stay afloat.

This is even as the Nigeria Deposit Insurance Corporation (NDIC) has taken over the bank’s operations and commenced the liquidation process, aiming to protect depositors and maintain stability in the banking sector.

In response to several reports that Heritage Bank was gradually sinking, the CBN took immediate action on June 3, 2024.

The Acting Director of Corporate Communications at the CBN, Mrs Hakama Sidi Ali, stated: “The Central Bank of Nigeria (CBN), in accordance with its mandate to promote a sound financial system in Nigeria and the 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. 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.”

Following the revocation, the NDIC announced the start of the liquidation process.

The Corporation, yesterday, announced that it has begun verifying and paying insured deposits to depositors, in accordance with the NDIC Act 2023.

According to the Corporation, depositors with alternate bank accounts will receive payments of up to N5 million, while those with funds exceeding this amount will receive liquidation dividends after the bank’s assets are realized and debts recovered.

“Depositors without alternate bank accounts are advised to visit the nearest Heritage Bank branch with proof of account ownership and identification to verify their deposits and receive payments.

“Additionally, they can file claims online through the NDIC’s website. Creditors are also encouraged to file their claims at the nearest branch or online, while debtors are urged to contact the NDIC’s Asset Management Department to settle outstanding loans”, it stated.

The NDIC, therefore, assured the public of its commitment to safeguarding depositors’ funds across all licensed banks and encouraged depositors to continue their banking activities without fear.

This assurance aims to maintain confidence in the financial system amidst the turmoil caused by Heritage Bank’s collapse.

It, is, however, worthy of note that Heritage Bank’s demise follows a series of reports indicating its gradual financial decline. Despite various efforts to stabilize its operations, the bank’s Board and Management were unable to turn around its financial performance.

The CBN’s intervention reflects its mandate to ensure a robust and sound financial system in Nigeria.

Meanwhile, the NDIC’s role as the liquidator involves not only managing the payout to insured depositors but also realizing the bank’s assets and recovering debts to maximize returns to creditors and uninsured depositors. This process is crucial to mitigating the impact of the bank’s failure on the broader financial system.

As the liquidation process unfolds, the NDIC’s proactive measures are expected to provide some relief to affected depositors and stakeholders, while also reinforcing regulatory oversight in the banking sector.

The fall of Heritage Bank serves as a reminder of the challenges faced by financial institutions and the critical importance of maintaining sound financial practices to ensure stability and trust in the banking system.