The Central Bank of Nigeria (CBN) has revoked the operating license of Heritage Bank Plc, effective immediately following its report that the bank’s failure to improve its financial performance poses threat to financial stability.
According to the CBN, the bank breached Section 12 (1) of the Banks and Other Financial Act (BOFIA) 2020 and failed to maintain adequate capital reserves and liquidity ratios. Despite various supervisory measures taken by the regulator, the bank’s management was unable to stem the decline.
The Acting Director of the Corporate Communication Department of the apex bank, CBN, Sidi Ali, disclosed this in a statement on Monday. The statement reads:
“The Nigerian financial system remains on a solid footing
We are committed to ensuring the safety and soundness of our financial system, and this action reflects that commitment,” the statement added.
The Nigeria Deposit Insurance Corporation has been appointed as the liquidator of Heritage Bank following the Banks and Other Financial Act of 2020.
The recent decision by the CBN to revoke Heritage Bank’s license is considered a major move aimed at ensuring the stability of the financial system and safeguarding depositors’ funds. It has been emphasized that this action will not hurt the overall health of the financial system.
The statement read, “The Central Bank of Nigeria (CBN), following its mandate to promote a sound financial system in Nigeria and exercise its powers under Section 12 of the Banks and Other Financial Act (BOFIA) 2020, hereby revokes the license 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.
“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.
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.
“The Nigeria Deposit Insurance Corporation (NDIC) is hereby appointed as the liquidator of the bank under Section 12 (2) of BOFIA, 2020.
“We wish to assure the public that the Nigerian financial system remains on a solid footing. The action we are taking today reflects our continued commitment to take all necessary steps to ensure the safety and soundness of our financial system.”