FirstBank Plc
<h4>FIRSTBANK EXPOSURE TO HERITAGE BANK HAS BEEN SETTLED</h4>
<p>The Nigeria Deposit Insurance Corporation (NDIC) yesterday announced the<br />
commencement of the liquidation of the defunct Heritage Bank Plc, following the<br />
revocation of its operating licence by the Central Bank of Nigeria (CBN).<br />
The corporation said the move was in accordance with Section 55 sub-section 1 and 2<br />
of the NDIC Act 2023, adding that depositors of the defunct bank that have alternate<br />
accounts within the industry would be paid up to the insured amount of N5 million per<br />
depositor using their Bank Verification Number (BVN) to locate their alternate account.<br />
In a statement, NDIC Director, Communication and Public Affairs, Bashir Nuhu, said that<br />
the liquidation process was with immediate verification and payment of insured deposits<br />
to the bank depositors.<br />
He said depositors with funds more than N5 million would be paid liquidation dividend<br />
upon realisation of the bank’s assets and recovery of debts owed to Heritage Bank.<br />
The revocation is coming on the revelation that FirstBank’s total exposure to Heritage<br />
bank amounted to about N500 billion.<br />
The CBN under former Central Bank Governor, Godwin Emefiele, got FirstBank to<br />
support Heritage Bank at the level of forbearance, clearing of their checks and<br />
instruments. “This led to their massive indebtedness to FirstBank to the tune of N500<br />
billion,” a source with knowledge of the matter revealed.<br />
THISDAY reliably learned last night that before the announcement of the revocation of<br />
Heritage Bank’s licence was made, CBN paid off First Bank’s exposure to Heritage.<br />
Since its intervention was at the behest of the apex bank under Emefiele.<br />
The NDIC further advised all depositors of the defunct bank without alternate bank<br />
account in the industry to visit the nearest branch of the bank with proof of account<br />
ownership, verifiable means of identification such as driver’s licence, permanent voter’s<br />
card, national identity card, together with their alternate account and BVN for the<br />
verification of their deposits and subsequent payment of insured sums.<br />
Nuhu, also the bank’s creditors to visit the nearest branch of the bank to file their claims<br />
or via the online platform, adding that the process of payment of creditors would<br />
commence immediately after all depositors have been paid.<br />
He also advised debtors that are yet to complete the repayment of loans to contact the<br />
corporation’s Asset Management Department (AMD) or visit the NDIC website for more<br />
details.</p>
<p>The NDIC however, assured the entire banking public of its commitment to the<br />
continued safety of depositors’ funds in all licensed banks.<br />
It therefore, urged depositors to continue their banking businesses without fear as<br />
banks whose licenses have not been revoked remain safe and sound.<br />
The CBN had earlier announced the revocation of the operating licence of the failed<br />
bank with immediate effect.<br />
In a statement issued by CBN acting Director, Corporate Communications, Mrs.<br />
Hakama Sidi Ali, the apex bank said the move was in accordance with its mandate to<br />
promote a sound financial system in Nigeria and in exercise of its powers under Section<br />
12 (1l of the Banks and Other Financial Act (BOFIA) 2020.<br />
The central bank pointed out that the Board and management of the bank had not been<br />
able to improve the bank’s financial performance, a situation which constitutes a threat<br />
to financial stability.<br />
This followed a period during which the CBN engaged with the bank and prescribed<br />
various supervisory steps intended to stem the decline.<br />
Sidi Ali said, “Regrettably, the bank has continued to suffer and has no reasonable<br />
prospects of recovery, thereby making the revocation of the license the next necessary<br />
step.”<br />
Specifically, the CBN said the action became necessary due to the bank’s breach of<br />
Section 12 (1) of BOFIA, 2020.<br />
The CBN acting director further explained that the central bank took the action to<br />
strengthen public confidence in the banking system and ensure that the soundness of<br />
the financial system was not impaired.<br />
She said the NDIC had also been appointed as the liquidator of the distressed bank in<br />
accordance with Section 12 (2) of BOFIA, 2020.<br />
She explained, “We wish to assure the public that the Nigerian financial system remains<br />
on a solid footing.<br />
“The action we are taking today reflects our continued commitment to take all necessary<br />
steps to ensure the safety and soundness of our financial system.”<br />
However, reacting to the licence revocation by the CBN, Founder/Chief Executive<br />
Officer of Proshare Nigeria Limited, Mr. Olufemi Awoyemi, argued that at least four other<br />
banks “are in situations requiring swift CBN intervention; therefore, the #CBN and the<br />
#NDIC will have to shift regulatory/intervention gear sticks to ensure that the banking<br />
system works with minimal disruption.”<br />
He pointed out that the revocation of Heritage Bank’s licence did not come as a<br />
surprise.</p>
<p>“For a bank under forbearance, this was a long time coming (as we recall the number of<br />
reports on same and challenges with similar entities under the same program), given<br />
the numerous follow-ups done by Proshare.<br />
“Neither the CBN nor NDIC took to Proshare’s recommendations; with the wheels now<br />
turning full circle with the CBN’s recent decision to liquidate Heritage Bank, the crackling<br />
of regulatory noise has been tuned up. Therefore, we remain unsurprised and ask why it<br />
took so long for the regulators (CBN and NDIC) to see the merit in the<br />
recommendations proffered,” he added.<br />
According to him, almost five years after, and sequel to the multiple interventions by the<br />
CBN, including its forbearance position, nothing changed.<br />
“Eventually, it would appear that the CBN took the first option we proposed. The action<br />
today compels the need to interrogate the institutional decision-making capacity and<br />
capability in the face of the obvious financial system and organisation shortcomings,”<br />
Awoyemi said.<br />
Also, Head, Financial Institutions Ratings at Agusto &;amp; Co, Mr. Ayokunle Olubunmi said,<br />
“Heritage Bank has been struggling for a while now. The bank’s capital has been<br />
persistently below the CBN minimum threshold.<br />
“I believe that the revocation is meant to send a message to the banks that the CBN will<br />
not hesitate to revoke the licence of any bank in breach of the CBN regulations. It could<br />
also sanitise the banking industry to an extent.”<br />
He noted that the revocation could improve confidence in the financial system since the<br />
banks know that their licences could be withdrawn and would have to comply with the<br />
various regulations.<br />
Olubunmi, further stressed that the recent increase in the NDIC coverage would provide<br />
some comfort to depositors.<br />
Also, a banker who pleaded anonymity said the distressed bank had not reported their<br />
financials in five years, adding that he perceived two other banks have negative capital<br />
and bad financials which may go the route of license revocation.<br />
The source said, “Heritage Bank had not produced their financials for years and over<br />
the years there had been various investors that had tried to acquire the bank but once<br />
they did their due diligence they backed out. Things have been so bad that they don’t<br />
have senior staff for certain pertinent positions such as Chief Risk Officer and Treasurer.<br />
So, things have been bad in the bank for a while.”</p>
<p>Culled from ThisDay</p>

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