The Nigerian Deposit Insurance Corporation (NDIC) has announced that the payment of depositors at Heritage Bank will begin before the end of the week. This announcement was made by the NDIC’s Managing Director, Bello Hassan, during a briefing on the bank’s liquidation held in Abuja on Wednesday.

The NDIC initiated the liquidation process for Heritage Bank following the Central Bank of Nigeria’s (CBN) decision to revoke its banking license on Monday. Hassan revealed that the total bank deposits at Heritage Bank amount to N650 billion, while its loan portfolio exceeds N700 billion. He also assured that efforts to ensure loan repayments would be a priority over the next six months.

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Hassan explained that the NDIC is currently verifying all depositors for the onward payment of insured benefits up to N5 million. Depositors with insured deposits exceeding N5 million will be compensated after the sale of the bank’s assets. According to NDIC data, Heritage Bank has approximately 2.3 million depositors, with 99 percent of them holding balances of less than N5 million. Heritage Bank operates around 116 branches nationwide.

This assurance from the NDIC aims to alleviate the concerns of Heritage Bank customers who have been anxious following the revocation of the bank’s license. The CBN’s decision to revoke the license is part of its mandate to ensure a stable financial system in Nigeria, executed under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.

Hakama Ali, the Acting Director of Corporate Communications at the CBN, issued a statement explaining the reasons behind the license revocation. According to Ali, Heritage Bank had breached Section 12 (1) of BOFIA 2020. He noted that despite various supervisory measures prescribed by the CBN to reverse the bank’s decline, the Board and Management of Heritage Bank failed to improve its financial performance. This persistent underperformance posed a threat to financial stability, necessitating the revocation of the license.

Ali further elaborated that the CBN had engaged with Heritage Bank over an extended period, attempting various supervisory interventions to mitigate the bank’s financial issues. Despite these efforts, the bank continued to deteriorate with no reasonable prospects of recovery. Thus, the CBN concluded that revoking the license was an essential step to safeguard the integrity of the financial system.

In response to the revocation, the CBN appointed the NDIC as the liquidator of Heritage Bank, as stipulated under Section 12 (2) of BOFIA 2020. This move is intended to bolster public confidence in the banking sector and ensure that the soundness of the financial system is not compromised.

The NDIC’s prompt action in commencing depositor payments underscores its commitment to protecting the interests of depositors and maintaining stability within the banking sector. As the liquidation process unfolds, all eyes will be on the NDIC’s efforts to manage the repayment of loans and the sale of assets to ensure that depositors with larger balances are adequately compensated.

For Heritage Bank’s customers, this development marks the beginning of a resolution process that aims to provide them with the financial relief and security they have been anxiously awaiting. The NDIC’s structured approach to managing the liquidation and its transparent communication strategy are crucial steps in restoring trust and confidence in Nigeria’s banking system.