Heritage Bank: NDIC to begin payment to 2.3 million depositors this week

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The Nigeria Deposit Insurance Commission (NDIC) says it will begin payment to 2.3 million depositors of the Heritage Bank this week.

The Managing Director of NDIC, Mr. Bello Hassan, made this statement during a press briefing in Abuja on Wednesday.

Hassan reported that the bank initially held deposits totalling N650 billion and loans amounting to N700 billion.

He noted that 99.9% of the depositors from the defunct bank had balances of less than N5 million, whereas only 4,000 depositors had balances exceeding N5 million.

There are about 116 branches of heritage banks across the country according to Mr. Bello Hassan.

Backstory

The assurance of payment by the NDIC provides hope to Heritage Bank customers who have been panicking following the revocation of the bank’s license on Monday by the Central Bank of Nigeria (CBN).

  • According to the CBN, the license revocation was part of its mandate to promote a sound financial system in Nigeria and was executed under its powers granted by Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
  • In a statement by the Acting Director of Corporate Communications at the Apex Bank, Hakama Ali, it was noted that the bank had violated Section 12(1) of BOFIA 2020. She added that the bank’s Board and Management had failed to improve its financial performance, posing a threat to financial stability.
  • The CBN stated that it took action to bolster public confidence in the banking system and ensure the soundness of the financial system remained intact. The apex bank then appointed the Nigeria Deposit Insurance Corporation (NDIC) as the bank’s liquidator under Section 12(2) of BOFIA 2020.

What you should know

Following the revocation of Heritage’s bank license, there were reports that the apex bank would go further to revoke the licenses of other banks perceived to be having similar financial performance.

  • However, the CBN yesterday stated that it has no such plans to do so stating that the claims are baseless and targeted at causing panic in the financial sector.
  • Furthermore, an exclusive Nairametrics report revealed that First Bank of Nigeria (FBN) had recouped around N456 billion in loans from Heritage Bank before the CBN revoked its banking license.
  • This recovery is part of a “bailout loan” arranged during the tenure of former Central Bank of Nigeria (CBN) Governor Godwin Emefiele.
  • According to top sources from First Bank, the CBN credited the tier-one bank before deciding to revoke Heritage Bank’s license, thereby averting a potentially significant impairment charge for First Bank.

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Source link: Nairametrics

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