Amidst the chaos currently prevailing over Heritage bank as a result of its poor performance and inability to meet the basic criteria of the Central Bank of Nigeria, CBN, to operate sustainably, some members of the minority shareholders community have called for a probe of the management and directors.
This follows the recent revocation of Heritage Bank’s licence by the CBN, causing many to describe the financial institution as a “failed bank” and raising concerns amongst customers.
A member of the banks’ minority shareholders community and national Coordinator of Progressive Shareholders Association, Boniface Okezie who spoke to news men recently, faulted the CBN for tempering justice with mercy even when they knew that Heritage Bank was performing below expectation.
The shareholder argued that, if necessary actions were taken earlier, the quagmire both the bank and its customers have found themselves would not have seen the light of day, adding that, probing the bank managers would boost confidence in the sector.
Mr Boniface further said that in order to get things right, now that so much has already gone wrong, the management of the bank, including managing directors and executive directors should be thoroughly investigated.
He said, “CBN is also part of the problem in the system, if the bank had been insolvent over the years and they had been living under the mercy of CBN, which should have taken action. In all this, what is the role of AMCON? They should have taken over the bank after all, the bank was also paying a levy to AMCON. Instead, CBN has directed NDIC to take over for liquidation. Is that the way to go?
“Someone has N20m in the bank and you pay them N5m until the assets of the bank have been assessed and liquidated. That is wrong. It is going to discourage people from using banks.
“Besides, is it only Heritage Bank that is insolvent? What is the fate of some other banks in the sector? Are they strong and viable? They should tell us. The management should be called for questioning. Those who ran the bank aground should be called for questioning. It is not enough that NDIC should liquidate.
“There must be a probe to recover people’s money. What assets does the bank have? CBN should probe the collapse of the bank so that others can learn. This is not good enough, something has to be done to arrest the situation,” he stated.
Similarly, the National Coordinator of the Independent Shareholders Association of Nigeria, Moses Igbrude, who also spoke to newsmen in a recent chat, called for an immediate investigation of the “failed bank’s” management saying such matter should not be allowed to slide. He warned against reoccurrence of such issues if drastic measures are not taken to correct the wrongs of Heritage bank, its management and the nation’s apex financial institution, CBN whose decision he applauded for being in line with its legal mandate but faulted for not being proactive enough on the matter.
He said, “They must probe the management of the bank. They should not let it slide because it will happen again if people are let off the hook. Let them investigate exactly what happened to learn lessons and ensure it does not happen again.”
“The CBN is the regulator, empowered by law to supervise, to know which bank is healthy and which is not, so they are just doing their job. However, why did it take so long to do what is necessary?
“Also, they had another option to rescue the bank, remove the management, and put in place a CBN-led management to ensure it is standing and no one loses anything. At the end of the day, they sell it to Nigerians. This option would retain the employees.
“It was an option, but they decided to revoke the licence,” he opined.
Igbrude went on to ask, “What happened? Were those in charge not managing it well? Did they give loans that went bad? CBN didn’t tell us. In an environment like this, I would have preferred the option I suggested. That way, the signal would not be as bad as folks are thinking now.”
On her part, President of the Pragmatic Shareholders Association, Bisi Bakare lauded the CBN for the step taken, stating that, “The CBN has taken the right step on it. The depositors are a bit covered. It is only the shareholders of the bank who will suffer for it.”
Recall that the CBN oon Monday, revoked Heritage Banks’ operational licence, announcing that it was with immediate effect. In a statement, the CBN thereafter appointed the Nigeria Deposit Insurance Corporation as the liquidator of Heritage Bank in line with Section 12 (2) of BOFIA, 2020.
The statement read, “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.
“This follows a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline. 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.”
By liquidation, the CBN implies that NDIC will be responsible for permanently closing Heritage Bank and all its branches across the country as the apex bank alleged that there were no reasonable prospects of recovery for the defunct financial institution.
NDIC will also be responsible for selling off any assets Heritage Bank currently has and using the proceeds to settle as many of the bank’s remaining liabilities as possible. This will include paying off depositors the money that they had in their accounts as were covered by insurance.
In a recent development, NDIC, through its Managing Director, Hassan Bello announced that it would commence the payment of insured deposits by next week. According to the bank’s insurer, Heritage Bank had only 2.3 million customers’ deposit list with about N650 billion total deposits and a loan record of over N700 billion according to official documents.
The NDIC while assuring that it would go after debtors to recover the loan, disclosed that 99.9 per cent of the bank’s 2.3 million customers has a balance of less than N5 million deposits with the bank while only about one per cent has deposits above N5 million.
Regardless, the bank’s insurer would be paying depositors an insured amounts up to the maximum of N5 million according to Mr Bello.
