We‘ll recover N700bn loan owed liquidated Heritage Bank – NDIC

The Nigerian Deposit Insurance Corporation (NDIC) Wednesday vowed to recover the N700 billion debts owed the liquidated Heritage Bank.

Managing Director of NDIC, Bello Hassan, who disclosed this at a press conference in Abuja, assured that the amount, when recovered, would effectively cover the N650 billion deposited with the bank by its customers.

He said: “Our preliminary assessment, the total deposit is around N650 billion while the loans are well above N700 billion. So we believe if we are able to recover all the loans no depositor is going to lose their money and creditors as well.

“I believe this time around it’s going to be different. Before now, one of the greatest challenges we faced is that of recovery because of insufficient legal framework that empowers the corporation to be able to recover those loans that were granted by banks in liquidation.

“We must thank the legislature for passing the NDIC Act 2023, it has really sufficiently empowered NDIC to be able to recover the debts that were granted by the banks in liquidation and I want to assure the banking public that we are going to leverage on those powers to be able to recover as much as possible and we are starting this process as quickly as possible because there’s really no time to waste. Those depositors are waiting to realise their deposits. We believe by doing so, it will go a long way in engendering confidence in the system thereby promoting stability.

“For additional information, you can go through the act and see additional powers provided in the reviewed act and those powers are really sufficient to enable us charge those depositors and recover the money as quickly as possible because these money that was learnt to them was actually not the bank’s money but depositors’ money. So, they need to repay back so that we can pay those depositors.

“We assure depositors that there is no need to panic and that they will get their money bank.”

Bello also assured depositors that the now liquidated bank had commenced the process of payment to all depositors.

According to the NDIC MD, based on preliminary assessment of the books of the bank, the depositors fund is about N650 billion.

The NDIC boss was confident that the payment process to depositors would not exceed one week.

“This is what is required for us to pay the insured amount and we are going to pay the insured amount now. This insured amount is going to be paid from the deposit insurance fund that has built up over time from premiums being collected from this institution on an annual basis.

“The maximum amount is five million per depositor, so whatever amount less than five million will be paid in full now and for amounts higher than five million, we will pay five million now because that is the maximum insured amount. After this, the next process is for us to realise all the assets both physical and the loans the bank granted while it was in operation.

“When we realised those assets, we are now going to declare what we call liquidation dividend and that’s what we’ll pay to the uninsured portion of the deposit and when we finished, we move to the creditors if there’s surplus from the realisation of those assets,” he explained.

The NDIC boss further disclosed that “among the 2.3 million depositors of the bank, 99 per cent have deposits below N5 million which is within the threshold which the NDIC insures for bank depositors.”

…On litigation

When asked about litigation that may likely come as it seeks to recover debts owed the bank, the NDIC helmsman said the Corporation was ready for any litigation that would emanate from the handover of the bank.

He said the deposit insurer would rely on the goodwill and support of the judiciary to expedite hearings on any debt recovery case brought by it.

“NDIC is ready for litigation that will come up in the cause of this exercise. We have engaged with the judiciary to give liquidation cases accelerated hearing so that justice is served.

“When cases are delayed in debt recovery, it is depositors that suffer,” he said.

He assured bank depositors that the financial system was sound, saying that the Corporation will “do everything possible to protect them.”

…The revocation

Earlier this week, the Central Bank of Nigeria announced the revocation of the banking licence of Heritage Bank over what it described as the bank’s inability to improve its financial performance.

“The Central Bank of Nigeria (CBN), in accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of the Banks and Other Financial Act (BOFIA) 2020, hereby revokes the licence of Heritage Bank Plc with immediate effect.

“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,” the CBN had said.

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