The Central Bank of Nigeria (CBN) has taken the drastic measure of revoking the banking license of Heritage Bank PLC, citing the institution’s failure to improve its financial performance as a threat to Nigeria’s overall financial stability.
In a press release issued on Monday, Hakama Sidi Ali, the Acting Director of Corporate Communications at the CBN.
It stated, “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 Explainer learnt, the decision to revoke Heritage Bank’s license was made in accordance with the CBN’s mandate to promote a sound financial system in Nigeria, as granted by Section 12 of the Banks and Other Financial Act (BOFIA) 2020.
According to Ali, “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 CBN emphasized that the move was crucial to “strengthen public confidence in the banking system and ensure that the soundness of our financial system is not impaired.”
To oversee the winding down of Heritage Bank’s operations, the Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the liquidator, as mandated by Section 12 (2) of BOFIA 2020.
Despite the revocation, the CBN sought to reassure the public, stating, “The Nigerian financial system remains stable and robust,” and reiterating its commitment to safeguarding the safety and soundness of the financial system.