The Nigerian Deposit Insurance Commission (NDIC) has started liquidating Heritage Bank following its appointment as liquidator by the Central Bank of Nigeria (CBN). The bank’s failure to improve financial performance, threatening financial stability, led to revoking its licence. The CBN stated that the bank’s failure to improve has led to no reasonable recovery prospects.
A statement signed by Bashir Nuhu, Director of Communication & Public Affairs, was released by the NDIC as the bank’s liquidator, revealing that depositors will get up to N5 million.
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According to Bashir, Bank Verification Numbers will be used to identify alternate accounts, and depositors will receive payments up to the insured amount of N5 million per depositor. Payment of liquidation dividends to depositors over N5 million will occur once the bank’s assets are sold and its obligations are repaid.
The Nigerian National Deposit Insurance Corporation (NDIC) has advised depositors of defunct banks without alternate bank accounts to visit their nearest branch with proof of account ownership, identification, alternate account, and Bank Verification Number.
The NDIC assures the banking public of its commitment to the safety of depositors’ funds in all licensed banks. The Bank Customers Association of Nigeria supports CBN revoking Heritage Bank’s licence.
Bank Safety Experts Back CBN
Dr. Uju Ogubunka, President of the Bank Customers Association of Nigeria, believes the Central Bank of Nigeria’s decision to let one bank go provides safety for the banking sector. He argues that the bank’s situation has implications for other banks, institutions, and individuals and that authorities must consider the bank’s position and potential redemption, acquisition, or merger options.
He said that CBN would have arrived at the decision having engaged with the bank’s senior management and directors.
Ogunbunka also declared in his statement that The Central Bank of Nigeria (CBN) has taken legal steps to address a critical situation, requiring the regulator to take necessary steps.
The move would cause inconvenience for bank customers, especially those with accounts and relationships with the bank. The NDIC will take over the bank and determine how to repay those with credit, except those indebted.
Uche Uwaleke, the professor of Capital Market, echoed similar sentiments, saying he thinks the revocation of the licence of Heritage Bank by the CBN is a step in the right direction.
Uche added that 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 and the interests of employees using liquidation dividends.
House of Representatives, NDIC, and CBN to protect depositor funds
The House of Representatives has pledged to ensure the safety of depositors’ funds with Heritage Bank following revoking its licence and appointing the NDIC as liquidator. The House will conduct constructional oversight to prevent a negative impact on Nigerians and examine the decision’s circumstances.
The statement made by the spokesman, Akin Rotimi, said that the preservation of the financial system’s stability and protection of all depositors’ interests come first. To guarantee a transparent and well-organised settlement process and to lessen any potential adverse effects on the general public, they shall collaborate with the CBN, NDIC, and other pertinent parties.
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To ease public concerns and avoid any decline in public confidence in their financial system, they implore the CBN and NDIC to set up open lines of communication. They maintain confidence during this time, which requires effective public interaction.
The Chairman of the House Committee on Banking Regulations, Mohammed El-Rufai, stated that the committee will closely monitor the liquidation process to ensure that the rights of depositors are protected and that the process adheres to the highest standards of transparency and accountability.
Furthermore, Ahmed Jaha, the chairman of the committee on Insurance and Actuarial Matters, stated that they will work diligently to ensure that the NDIC executes its mandate effectively, ensuring the protection of depositors’ funds and maintaining confidence in the financial sector; the provisions of the Banks and Other Financial Institutions Act and the NDIC Act makes it abundantly evident that depositors money are safeguarded and insured.