ABUJA, Nigeria (AP) – The Central Bank of Nigeria has revoked the operating license of Heritage Bank Plc with immediate effect, citing the lender’s inability to meet minimum capital requirements and other prudential regulations.
In a statement released on Friday, the CBN Governor Godwin Emefiele said the monetary authorities took decisive action in order to protect depositors and maintain overall financial system stability.
“Heritage Bank has completely eroded its capital base with its capital adequacy ratio falling to a negative 116.8% as of December 2022,” Emefiele said. “The bank has also experienced a continued shortage of liquidity which has impaired its ability to honour obligations to creditors and depositors.”
He added that the bank’s bad loans ratio of over 52% was among the highest in the industry and far exceeded the 5% threshold set by regulators. Heritage Bank’s troubles have lingered for several years despite repeated corrective actions and interventions by the CBN.
As part of the resolution process, the Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the official liquidator. The NDIC assured Heritage Bank’s depositors that their funds remain safe and have been transferred to an approved bridge bank until final liquidation.
“We have commenced the process of finally resolving Heritage Bank in an orderly manner that protects depositors’ interests,” the NDIC managing director stated. “We urge affected stakeholders to remain calm and cooperative during this transition.”
Established in 2012 after acquiring the assets of the failed Societe Generale Bank, Heritage Bank rapidly grew to become one of Nigeria’s largest commercial lenders with over 200 branches nationwide. However, years of risky lending practices, weak corporate governance and regulatory forbearance eventually precipitated its downfall.
The CBN has moved to assure the banking public that Heritage Bank’s collapse poses no systemic risks, noting that most Tier-1 banks in Nigeria remain well-capitalized. Nonetheless, analysts say the latest developments could accelerate much-needed banking sector reforms.
