CBN: No Plans to Revoke Additional Banking Licences

•Insists industry remains safe, sound, declares recapitalisation will boost resilience

James Emejo in Abuja

Following the recent revocation of the operating license of Heritage Bank Plc, the Central Bank of Nigeria (CBN) yesterday clarified that there was currently no further plans to withdrawal additional banking license as insinuated in some quarters.

The central bank’s clarification came against the backdrop of some information circulating in the public domain, suggesting that the apex regulatory institution was set to revoke the licenses of three additional banks.

In a statement, CBN acting Director, Corporate Communications, Mrs. Hakama Sidi Ali, described the allegations as false and intended to trigger panic in the financial system.

She maintained that the Nigerian financial system remained safe, sound, and resilient, adding that the ongoing recapitalisation of the industry would boost capital injection among others.

She said, “Our banks have begun submitting implementation plans for the Banking Sector Recapitalisation Programme in compliance with the CBN Circular reviewing the minimum capital requirements for Commercial, Merchant, and Non-Interest Banks (CMNIBs).

“These plans are currently being reviewed by the bank. In addition to enhancing buffers to withstand economic shocks, this proactive measure by the CBN to require CMNIBs to recapitalise will result in increased capital for Nigeria’s banks, enabling them to provide much-needed credit to critical sectors of the economy.

“This will increase the financial system’s contribution to the growth and development of a $1 trillion Nigerian economy.”

Sidi-Ali further reassured all stakeholders of the central bank’s unwavering commitment to ensuring financial system’s stability.

She said, “Our financial system remains on a solid footing, and the CBN will continue to take all necessary steps to maintain its safety and soundness.”

The CBN had revoked the operating licence of Heritage Bank Plc with immediate effect, following its inability to improve its financial performance as well as breach regulatory guidelines.

Sidi Ali, the apex bank said the move was in accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 (1l of the Banks and Other Financial Act (BOFIA) 2020.

Following the revocation of its banking license, the Nigeria Deposit Insurance Corporation (NDIC) also disclosed that it had commenced the liquidation of the defunct bank in accordance with Section 55 sub-section 1 and 2 of the NDIC Act 2023.

The central bank pointed out that the Board and Management of the bank had not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability.

This followed a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline.

Sidi Ali said, “Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby making the revocation of the license the next necessary step.”Specifically, the CBN said the action had become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020.

The CBN acting director further explained that the central bank had taken the action to strengthen public confidence in the banking system and ensure that the soundness of the financial system was not impaired.

She said the  Nigeria Deposit Insurance Corporation (NDIC) had also been appointed as the liquidator of the distressed bank in accordance with Section 12 (2) of BOFIA, 2020.

She said, “We wish to assure the public that the Nigerian financial system remains on a solid footing. “The action we are taking today reflects our continued commitment to take all necessary steps to ensure the safety and soundness of our financial system.”

The NDIC also announced the commencement of the liquidation process of the failed bank with immediate verification and payment of insured deposits to the bank depositors.

In a statement, NDIC Director, Communication and Public Affairs, Bashir Nuhu,  said depositors of the bank that have alternate accounts within the industry will be paid up to the insured amount of N5 million per depositor using their Bank Verification Number (BVN) to locate their alternate account.

He added that depositors with funds in excess of N5 million will be paid liquidation dividend upon realisation of the bank’s assets and recovery of debts owed to Heritage Bank.

The NDIC further advised all depositors of the defunct bank without alternate bank account in the industry to visit the nearest branch of the bank with proof of account ownership, verifiable means of identification such as driver’s license, permanent voter’s card, national identity card, together with their alternate account and Bank Verification Number (BVN) for the verification of their deposits and subsequent payment of insured sums.