The Central Bank of Nigeria (CBN) has exercised its powers under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020 to revoke the license of Heritage Bank Plc. This decision was formalized in a circular signed by Hakama Sidi Ali, the Acting Director of Corporate Communications, on Monday. The revocation is to take effect immediately.
Breach of BOFIA and Financial Instability
The CBN cited Heritage Bank’s breach of Section 12 (1) of BOFIA, 2020, as the primary reason for this drastic measure. According to the circular, the Board and Management of Heritage Bank failed to improve the bank’s financial performance, posing a threat to financial stability.
“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,” the statement read.
Supervisory Measures and Lack of Recovery
The CBN detailed its previous engagements with Heritage Bank, including various supervisory steps aimed at halting the bank’s decline. Despite these efforts, the bank’s financial health continued to deteriorate with no reasonable prospects for recovery, prompting the CBN to revoke the license.
“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,” the circular noted.
Appointment of NDIC as Liquidator
In accordance with Section 12 (2) of BOFIA, 2020, the Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the liquidator of Heritage Bank. This step is part of the measures to ensure the stability and soundness of the Nigerian financial system.
Assurance of Financial System Stability
The CBN assured the public that this action was taken to strengthen public confidence in the banking system and to safeguard the integrity of Nigeria’s financial system.
“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,” the CBN stated.
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Written By: Doris Chinwe Omemgbeoji