- How depositors were denied access to accounts in weeks
Following the revocation of the banking licence of Heritage Bank Plc by the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC) said it has commenced the liquidation of the bank with immediate verification and payment of insured deposits to the bank's depositors.
The NDIC, in a statement issued on Monday 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. While depositors with funds in excess of N5 million will be paid liquidation dividend upon realisation of the bank's assets and recovery of debts owed to the bank."
For the verification and payment of depositors without alternate bank account, the NDIC urged them to "Visit the nearest branch of the bank with proof of account ownership, verifiable means of identification such as 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 statement by the Director, Communication and Public Affairs of the NDIC, Bashir A. Nuhu explained.
Daily Trust had reported that the Central Bank of Nigeria (CBN), had earlier revoked the licence of the bank as it didn't show any significant sign of financial recovery.
The CBN said, "Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby making the revocation of the licence the next necessary step."
Depositors denied access to accounts in Heritage Bank for weeks
Checks by Daily Trust show that the revocation of Heritage Bank license by the CBN yesterday was the culmination of weeks of tortuous performance by the bank in fulfilling its obligations to depositors, it was learnt.
Many depositors have complained about not being able to access their accounts in the bank.
Worst still, the bank was rated to have the worst non-performing loan amounting N590bn, according to several reports.
A customer with the bank who identified herself as Mrs. Monica stated that she has not been able to access her account for months.
Another customer Victoria Audu said "The performance of the bank has dropped over the years, from not being able to log into the bank apps for several weeks, to the banking hall service becoming bad and so on. I hope this is a step in the right direction," she said.
Reports revealed that at least 90% of the bank's active loan portfolio of around N700 billion was considered lost or doubtful as of March 31, 2024.
The bank's tier-1 capital comprising equity, reserves, and accumulated earnings was in the deficit of over N1 trillion.
Meanwhile, the House of Representatives has assured Heritage Bank's depositors about the safety of their deposits despite the revocation of the bank's operating licence by the Central Bank of Nigeria (CBN).
In a statement on Monday, the House spokesperson, Rep. Akin Rotimi Jr said "We assure the public, particularly depositors and stakeholders of Heritage Bank, that the House is committed to carrying out its constitutional oversight functions to ensure that this development does not negatively impact Nigerians,"
It's the right step - Uwaleke
Reacting, a finance expert and the Special Adviser on Capital Market to the Chairman of Senate Committee on Capital Market, Prof Uche Uwaleke told Daily Trust that the revocation of the licence of Heritage Bank by the CBN is a step in the right direction.
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"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 interests of employees using liquidation dividends," he said.
Speaking further why the apex bank did not tow the path of a bridge bank, Uwaleke noted that "It all depends on the extent of the crisis giving rise to CBN intervention. A bridge bank solution becomes feasible when there's still a chance of salvaging the bank. But where the damage is such that a bank becomes irredeemable, then liquidation is the best option in such circumstances.
"This move by the CBN will strengthen public confidence, especially now that the deposit insurance coverage has been raised to N5 million effectively ensuring that nearly all the depositors will recover their deposits," he explained.
