HomeBlogUncategorizedHeritage Bank: What You Need to Know

Heritage Bank: What You Need to Know

Heritage Bank’s license was revoked by the Central Bank of Nigeria (CBN) on June 3, 2024. When a bank’s license is revoked, it loses the legal authority to operate and conduct banking activities.

Why was the Bank’s license revoked?

Insufficient Assets to Meet Liabilities: The bank had insufficient assets to meet its liabilities, which posed a significant risk to financial stability.

Unsound Business Conduct: Heritage Bank conducted its business in an unsound manner, which further contributed to its financial distress.

Failure to Comply with Regulatory Obligations: The bank failed to comply with specific obligations imposed upon it under the Banks and Other Financial Institutions Act (BOFIA) 2020 and the Central Bank of Nigeria Act.

Critical Undercapitalization: The bank was critically undercapitalized, with a capital adequacy ratio below the prudential minimum applicable to its license category.

Threat to Financial Stability: The bank’s financial performance and condition constituted a threat to financial stability, which necessitated the revocation of its license

The revocation of Heritage Bank’s license by the Central Bank of Nigeria (CBN) has significant implications for the bank’s customers which include:

  1. Customers will no longer be able to access their funds at Heritage Bank, as the bank is no longer operational. The Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the liquidator to manage the liquidation process.
  1. Eligible depositors will be paid insured sums up to a maximum of ₦5,000,000 per depositor after their eligibility has been confirmed. Customers will need to provide the necessary documentation to claim their insured deposits.
  1. Depositors with amounts exceeding the insured limit may be at risk and will need to follow the liquidation process to claim any additional funds. The NDIC will determine the total worth of the bank’s assets and start the liquidation process to pay off creditors.
  1. Over 80% of Heritage Bank’s depositors are expected to get their money back if the new NDIC policy of ₦5,000,000 insurance coverage applies. However, this is subject to the outcome of the liquidation process.
  1. The revocation has raised concerns and fears among Heritage Bank customers about the accessibility of their funds. Many customers have already reported difficulties in accessing their accounts.

In summary, while insured depositors up to ₦5,000,000 are expected to recover their funds, the revocation poses significant risks for customers with higher deposits. The liquidation process will determine the extent to which uninsured deposits can be recovered

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