With the verification and payout of bank depositors, the Nigerian Deposit Insurance Commission has started the liquidation process of the defunct Heritage Bank.
NDIC made this announcement on Monday, the day after the Central Bank of Nigeria appointed it as Heritage Bank’s liquidator and declared the bank’s license to be revoked.
The CBN stated in a statement that was signed by Sidi Ali, Acting Director of Corporate Communication, that the bank’s violation of Section 12 (1) of the BOFIA, 2020 has made this action necessary. The inability of the bank’s board and management to enhance the bank’s financial performance poses a risk to the stability of the financial system.
“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.”
In its capacity as the liquidator of the bank, NDIC issued a statement signed by the Director, Communication & Public Affairs, Bashir Nuhu, where it revealed that depositors will be get up to N5m.
“Depositors of the bank that have an alternate account within the industry will be paid up to the insured amount of N5m per depositor using their Bank Verification Number to locate their alternate account. Depositors with funds in excess of N5m will be paid liquidation dividends upon realisation of the bank’s assets and recovery of debts owed to the bank.
“Verification and Payment of Depositors Without Alternate Bank Account: All depositors of the defunct bank without alternate bank account in the industry are advised to visit the nearest branch of the bank with proof of account ownership, verifiable means of identification such as driver’s license, permanent voter’s card, National Identity Card, together with their alternate account and Bank Verification Number for the verification of their deposits and subsequent payment of insured sums or file an online claim on the NDIC website,” part of the NDIC statement read.
The corporation urged the bank’s creditors to visit the nearest branch of the bank to file their claims or via the online platform.
It explained that the creditors would be paid after depositors, adding that the failed bank’s debtors, who were yet to complete the repayment of loans, were advised to do so.
“The NDIC wishes to assure the entire banking public of its commitment to the continued safety of depositors’ funds in all licensed banks. As such, depositors are urged to continue their banking businesses without fear, as banks whose licences have not been revoked remain safe and sound,” NDIC concluded.
Meanwhile, the Bank Customers Association of Nigeria has supported the revocation of the licence of Heritage Bank by CBN. the President of the Bank Customers Association of Nigeria, Dr. Uju Ogubunka, opined that the apex bank’s decision provided safety for the banking sector.
Ogubunka stated, “The CBN cannot just take action without considering the implications. If a bank has been run aground, of course, it has implications for others. Other banks have dealings with it, and other institutions and individuals deal with the bank. So, if you put all of these together, that institution can jeopardise the system as a whole if the authorities do not take the necessary actions.
“The CBN would have considered the position of the bank; if irredeemable, for instance, from whatever status it is, can it be redeemed? Can it be acquired by another bank or merged with another bank, or can it be allowed to raise more money to shore up its capital and fulfil other obligations? If those questions are answered in the negative, the authorities will have no alternative. Instead of everybody being affected, let just one go and that is exactly what has happened.”
He noted that CBN would have arrived at the decision having engaged with the bank’s senior management and directors.
“They would have been asked to do one or two things they had been unable to do and the situation gets critical. The regulator would have no choice but to take the necessary steps within the law. Whatever CBN had done would be within the law and after several requests from those who are managers or directors of the bank to do certain things,” he asserted.
He added that while the CBN’s move was the right one, it would bring some inconvenience for bank customers, “especially those who have accounts with the bank and those who have relationships with the bank, even fellow bankers because the business is connected”.
“Bank customers, except those who are indebted to the bank, are the ones who will be bothered so much because they are the ones who are supposed to pay back some money to the bank, but if you have credit in your account, you just have to wait until NDIC takes over the bank and sees what is there and how they are going to repay those who have credit,” Ogubunka explained.
Professor of Capital Market, Uche Uwaleke, echoed similar sentiments, saying, “I think the revocation of the license of Heritage Bank by the CBN is a step in the right direction.
“This proactive step by the CBN is in the overall interest of financial system stability. With the NDIC taking over the liquidation process, efforts should be made to protect the depositors as well as the interests of employees using liquidation dividends.”
Also, the House of Representatives has pledged its commitment to engage with relevant stakeholders, to ensure the safety of depositors’ funds with Heritage Bank.
