Explainer: What next for customers after Heritage Bank collapse?

On Monday, the Central Bank of Nigeria (CBN) revoked the licence of Heritage Bank due to its prolonged struggle with non-performing loans.

The regulator said Heritage Bank, which started operations in 2013 after taking over the structures of the defunct Societe Generale Bank, had failed to improve its financial performance despite interventions by the CBN.

It is the first commercial bank failure in six years in Nigeria.

As required by law, the CBN appointed the Nigerian Deposit Insurance Corporation (NDIC) as the liquidator to manage the bank’s closure and ensure depositor protection.

NDIC’s Role and Payout

The NDIC under the law has the authority to take necessary steps to wind up the affairs of Heritage Bank. This includes:

• Taking over the bank’s operations.
• Managing the liquidation process.
• Ensuring that depositors receive their insured funds promptly.
• Overseeing the sale of the bank’s assets to satisfy larger deposit claims.

In a note to customers, the NDIC assured on Monday that it will pay depositors of defunct Heritage Bank, which operated as an insured institution.

The NDIC says it will a maximum of N5 million to each depositor, in accordance with the NDIC Act, 2023, which sets the statutory maximum for insured deposits in the event of a bank’s failure.

Until a month ago, the maximum amount payable to depositors in the event of bank failure was N500,000.

Here’s what depositors need to know:

Insured Deposits:

• Each depositor is guaranteed to receive their deposits up to N5 million.
• The pay-out by the NDIC is aimed at providing immediate relief to depositors with smaller balances. According to the NDIC, the amount will fully cover 98.98% of depositors.

Process for Receiving Insured Deposits:

• The NDIC says it will soon notify depositors through national newspapers regarding the commencement of insured deposit payments.
• Depositors are encouraged to stay alert for these notifications to understand how and where to claim their funds.

Deposits Exceeding N5 Million:

• Depositors with funds exceeding the insured limit will receive additional payments as and when the assets of Heritage Bank are sold, which is liquidation.
• The NDIC will manage the sale of the bank’s assets and use the proceeds to pay out these larger deposits.

Contacting NDIC for Queries:

• Depositors with questions or those requiring further clarification about their accounts, or the payment process can contact the NDIC directly, the corporation said.