In a shocking move that has sent shockwaves through Nigeria’s financial sector, the Central Bank of Nigeria (CBN) announced today that it has revoked the banking license of Heritage Bank Plc with immediate effect.
The apex bank cited the lender’s breach of Section 12 (1) of the Banks and Other Financial Institutions Act (BOFIA) 2020 as the primary reason behind this drastic decision. According to the CBN in a press statement signed by Hakama Sidi Ali, Ag. Director, Corporate Communications, Heritage Bank’s board and management have failed to improve the bank’s dwindling financial performance, a situation it considers a threat to the stability of the nation’s financial system.
The revocation comes after the CBN engaged with the bank over a period and prescribed various supervisory measures aimed at stemming the decline, but to no avail, The CBN expressed regret that Heritage Bank has continued its downward spiral with no reasonable prospects for recovery, leaving revocation of its license as the inevitable next step.
“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 CBN press release stated.
In line with Section 12 (2) of BOFIA 2020, the Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the liquidator of Heritage Bank. The CBN assured the public that the revocation was a necessary measure to strengthen confidence in the banking system and ensure the soundness of Nigeria’s financial system is not compromised.
The announcement has understandably caused panic among Heritage Bank’s customers, creditors, and other stakeholders. Long queues were seen at several of the bank’s branches across the country as customers rushed to withdraw their funds and close their accounts.
Financial analysts have expressed concern over the implications of this development, with some warning of potential job losses and a further erosion of public trust in the banking sector. Others, however, have applauded the CBN’s decisive action, arguing that it was a necessary step to maintain the integrity of the financial system.