Why CBN Revoked Heritage Bank License

The Central Bank of Nigeria (CBN) has announced the revocation of Heritage Bank Plc’s operating license with immediate effect. 

This decisive action aims to maintain a stable and healthy financial system, as authorized under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.

According to a statement by Mrs. Hakama Sidi Ali, Acting Director of Corporate Communications at the CBN, the revocation was executed because Heritage Bank breached Section 12 (1) of BOFIA 2020. This section outlines the regulatory framework under which banks must operate, including maintaining adequate financial health and operational standards.

The CBN cited several critical reasons for its decision to revoke Heritage Bank’s license:

Despite numerous interventions by the CBN, Heritage Bank’s Board and Management failed to improve the bank’s financial performance. This continued underperformance posed a significant risk to the stability of Nigeria’s financial system.

The bank’s prolonged struggle to recover from financial distress without any reasonable prospects for turnaround was a major factor. The CBN noted that despite various supervisory measures, Heritage Bank could not achieve the necessary financial health to continue its operations effectively.

The ongoing financial instability of Heritage Bank threatened the broader financial system. The CBN’s primary mandate includes ensuring the stability and soundness of the financial sector, and the continued operation of a failing bank was incompatible with this goal.

To address the fallout from the license revocation and to protect depositors’ interests, the CBN appointed the Nigeria Deposit Insurance Corporation (NDIC) as the liquidator of Heritage Bank, in accordance with Section 12 (2) of BOFIA 2020. The NDIC’s role is to manage the liquidation process efficiently, ensuring that depositors and other creditors are treated fairly and transparently.

In its statement, the CBN reassured the public that Nigeria’s financial system remains robust and secure despite the revocation of Heritage Bank’s license. The CBN emphasized that this action was a necessary step to preserve the integrity and stability of the financial system, and it was taken in the best interest of the banking sector and the economy at large.