Heritage Bank fails as CBN revokes licence

The Central Bank of Nigeria (CBN) has revoked the banking licence of Heritage Bank Plc, citing breaches of the Banks and Other Financial Act (BOFIA) 2020.

It is the first major bank to fail since the central bank revoked the licence of Skye Bank in 2018.

The regulator said it withdrew the licence over the bank’s failure to improve its financial performance, constituting a threat to financial stability.

“This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020. The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability,” CBN spokesperson, Sidi Ali, said in a statement on Monday.

According to the statement, the revocation followed the bank’s failure to comply with Section 12 (1) of BOFIA, 2020.

The central bank said Heritage Bank’s performance continued to deteriorate despite numerous supervisory interventions by the CBN aimed at reversing the decline.

The CBN appointed the Nigeria Deposit Insurance Corporation (NDIC) as the liquidator of Heritage Bank, as mandated by Section 12 (2) of BOFIA, 2020.

“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,” it said.

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Heritage Bank Plc was set up in 2012 and began operations in 2013 as a regional bank after taking over the structure of the defunct Societe Generale Bank of Nigeria which had failed to meet the central bank’s capital requirements of N25 billion in January 2006.

In 2014, Heritage Bank acquired Enterprise Bank for N56 billion, becoming a national bank. It was a controversial move that failed to deliver expected returns.

The bank has struggled for years, plagued by weak corporate governance that saw it execute questionable loans the lender found difficult to recover.

As of March 31, at least 90% of the bank’s active loan portfolio of around ₦700 billion was considered lost or doubtful, TechCabal reported Monday, citing internal documents. Some of those loans date back to 2018 when the bank reported loan impairment of ₦37.5 billion in the first half of 2018.