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Why CBN revoked Heritage Bank's License?

Nigeria's apex bank announced that it'd revoked the banking license of Heritage Bank Plc due to a breach of banking regulations.
Heritage Bank

The Central Bank of Nigeria (CBN) has revoked the operating license of Heritage Bank due to its consistent failure to meet regulatory requirements and maintain adequate capital. This decisive action underscores the CBN's commitment to ensuring financial stability and protecting the interests of depositors and the financial system as a whole. The CBN remains steadfast in upholding rigorous standards to enhance a robust and resilient banking sector.

According to the Apex bank, Heritage Bank breach of Section 12(1) of the Banks and Other Financial Institutions Act 2020. Hence, the the revocation had to be taken to maintain confidence in the company's financial system. In addition, Heritage Bank has been unable to improve its financial performance, thus threatening its financial stability.

The Section 12 of the Act empowers CBN to revoke any financial institution's license if it fails to meet any of ten specified conditions. These conditions include being critically undercapitalized, facing situations that threaten financial stability, conducting business in an unsound manner, or having insufficient assets to meet its liabilities.

"This follows a period during which the CBN engaged with the bank and prescribed various supervisory measures to halt its decline. Unfortunately, the bank continued to deteriorate with no reasonable prospects of recovery, making the revocation of its license the necessary next step," a statement by the CBN read.

Heritage Bank's Struggles and Investor Challenges

Last year, local media reported that Heritage Bank had been seeking strategic investors for about five years without success. The bank, initially intended to compete with Tier 1 banks, faced setbacks due to several missteps along the way. A former executive noted that despite initial interest, potential investors withdrew after reviewing the bank's financials, citing its high indebtedness as a deterrent.

In addition to investor challenges, customers recently complained about difficulties accessing their deposits. Although the bank attributed these delays to a system refresh exercise, issues persisted even after the supposed improvements. This combination of strategic missteps, high debt, and operational issues contributed to the bank's ongoing struggles and eventual license revocation by the CBN.

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With five years experience in Media, Temmy Samuel's become a modern journalist, delivering impressive reporting about tech, finance, business and science around the world. More About Temmy

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