KOREDE FOGO
One of the major reasons the Central Bank of Nigeria (CBN), revoked Heritage Bank PLC banking license was due to the over N590billion non- performing loan of the financial institution.
According to TechCabal, the bank has been
struggling with huge non-performing loans for years.
It was gathered that Heritage had one of the worst NPL ratios in the banking industry.
According to internal documents, at least 90% of the bank’s active loan portfolio of around N700 billion was considered lost or doubtful as of March 31, 2024. The bank’s tier-1 capital comprising equity, reserves, and accumulated earnings was in the deficit of over N1trillion.
Internal documents showed that less then 5% of outstanding loans were performing, with 90% classified as lost. Some of those loans date back to 2018 when the bank reported loan impairment of ₦37.5 billion in the first half of 2018.
According to people familiar with internal conversations, the bank was considering a host of strategies like storming the residences of defaulters with available security resources, employing debt recovery agents, sale of pledged property, and engagement with ex-staff.
The Nigeria Deposit Insurance Corporation (NDIC) has been appointed the liquidator of Heritage Bank. Essentially, NDIC officials will take over the existing management of the bank and will begin the payment of insured deposits up to the insurable limits which was recently increased from N500,000 to N5 million.
One NDIC official who asked not to be named said depositors will access their deposits as quickly as Wednesday.
Regulators will begin to find a buyer for the bank and in the interim, a bridge bank will be created to take over the bank’s failed assets and liabilities, allowing customers to continue accessing their deposits and banking services uninterrupted.
The last time a Nigerian bank—Skye Bank—was liquidated, Polaris Bank took over Skye Bank with a N786 billion cash injection