Why CBN revoke licence of Heritage Bank, wetin go happun to your money

Di Central Bank of Nigeria don revoke di licence of Heritage Bank PLC.

CBN tok say di bank breach some sections of di Banks and Other Financial Institutions Act (BOFIA) 2020.

Dis dey come less dan one month wey CBN release a list of Banks wey get licence to operate for Nigeria, and Heritage Bank na one of dem.

According to CBN, "di Board and Management of di bank neva fit improve di financial performance of di bank", and dis "constitute a threat to financial stability".

"Di bank don kontinu to dey suffer and e no get any reasonable prospects of recovery, na im make di revocation of di license di next necessary step," CBN tok for inside a statement on Monday.

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As e be now, Heritage Bank don stop to dey exist and di CBN don appoint di Nigeria Deposit Insurance Corporation (NDIC) as di liquidator of di bank in accordance wit di law.

Heritage bank started as Societe Generale Bank (Nigeria) for di 1970s, na di late Dr. Olusola Saraki found di bank

Wetin be di offence of Heritage Bank?

According to section 12 of di Banks and Oda Financial Institutions Act, di CBN govnor get power to revoke a bank licence wit approval from di board, and some of di reasons to revoke bank licence include:

• If di bank stop to dey carry on di type of banking wey dem give am license for, for a period of six months (Remember say e get different types of bank licence, for instance, regional, national and international.)
• If di bank enter liquidation or e fold up or e dissolve
• If di bank no fit comply wit any of di conditions wey bin qualify am for license
• If di bank no get enof assets to meet im liability
• If di bank dey do magomago for business, or if dia directors put hand for practice we no dey safe
• If di bank dey involve for situation or action wey fit threathen financial stability... etc

Lightning don strike twice

Wetin we call dis foto,

CBN bin revoke di licence of Societe General Bank in 2006, but dem resurrect in 2012 after a court order and change dia name to Heritage Bank

Dis na di second time for dia history wey CBN dey revoke di licence of Heritage Bank.

In 2006, wen Chukwuma Soludo be di govnor of CBN, e revoke di licence of Societe Generale Bank, during di bank re-capitalisation exercise.

Soludo bin raise di minimum capital requirement for banks in Nigeria from N2 billion to N25 billion, and dis exercise reduce di number of banks from 89 to 24.

As SGB no fit meet up wit dat recapitalisation exercise, di CBN revoke dia licence. But dem challenge di matter for court, and in 2012, di Federal High Court order CBN to give dem back dia licence.

On March 4, 2013, di bank begin business again under di new name Heritage Bank, but di licence wey CBN give dem na regional licence, which mean to say dia operations dey limited to a particular region of Nigeria.

However, only last month, di CBN release a list of banks wey get license to operate in Nigeria, and Heritage Bank appear dia as one of di banks wey get national authorisation, which mean to say dem get authority to operate for everywia for Nigeria.

Wetin go happen to pipo money?

Pipo wey get money for Heritage Bank no suppose panic bicos dia money neva loss, dem go still fit access am, but e fit no be immediately.

As di CBN tok say Nigeria Deposit Insurance Corporation (NDIC) go be di liquidator, e mean say di NDIC go make sure say dem settle all di customers wey get deposit wit di bank bifor dem go disolve di bank or sell am. Dis na one of di functions of NDIC.

Also, e get some oda mechanisms wey CBN put in place to protect depositors money should in case a bank fold or lose dia licence.

One of dem na di introduction of di Cash Reserve Ratio (CRR). Dis na part di total customers money wey a bank must to deposit wit di CBN at all times, so dat should in case anytin happen, dem go from dat money settle depositors dem.

Di CBN dey also use dis CRR to regulate money supply, inflation level, and liquidity for Nigeria. Under Godwin Emefiele, di CBN raise di CRR from 27.5% to 32.5%.