The Nigeria Deposit Insurance Corporation (NDIC) has successfully auctioned off the assets of the defunct Heritage Bank, a move aimed at reimbursing depositors with balances exceeding the insured limit of N5 million. The corporation announced this development at the ongoing 46th Kaduna International Trade Fair, where its Managing Director, Bello Hassan, reiterated NDIC’s commitment to financial stability and depositor protection.
Hassan, represented at the event by the Kano Zonal Office Comptroller, Ahmad Umar, explained that the liquidation process was being handled transparently in line with Section 62 (1)(d) of the NDIC Act, 2023. He assured that proceeds from the auction would be used to settle outstanding claims of depositors beyond the insured coverage, with additional payments to follow as more recoveries are made.
A Commitment to Depositor Protection
The NDIC boss emphasized that the corporation remains steadfast in ensuring that no depositor is left stranded following the revocation of Heritage Bank’s operating license on June 3, 2024.
“In line with our statutory mandate, we acted swiftly to reimburse insured depositors within four days using their Bank Verification Numbers (BVN),” Hassan stated. “The NDIC’s intervention ensured that affected customers were not left in financial distress.”
According to him, those whose accounts had no BVN, were subject to Post No Debit (PND) instructions, or had no alternate bank accounts are being contacted through phone calls and text messages for verification and payment processing.
“The corporation remains dedicated to ensuring that all eligible depositors and creditors receive their funds as soon as possible,” Hassan assured.
The Fall of Heritage Bank
Heritage Bank, once regarded as a promising player in Nigeria’s banking sector, faced mounting financial difficulties that ultimately led to its downfall. The Central Bank of Nigeria (CBN) revoked its license, citing insolvency and an inability to meet financial obligations to customers and stakeholders.
The bank’s financial troubles had been building up for years, with numerous reports of liquidity challenges, delayed transactions, and regulatory infractions. In the months leading up to its collapse, customers experienced difficulties accessing their funds, prompting widespread panic and frustration. The CBN, in collaboration with the NDIC, intervened to ensure that depositors were protected and systemic risk was minimized.
Following the license revocation, NDIC took charge of the liquidation process, initiating an immediate reimbursement of insured depositors and setting mechanisms in motion to recover and dispose of the bank’s assets.
Auctioning Heritage Bank’s Assets
The auction of Heritage Bank’s assets, including landed properties and movable assets (chattels), marks a critical step in repaying customers with funds exceeding the insured deposit limit.
Hassan reassured stakeholders that the process was conducted transparently and in accordance with the law.
“The liquidation process ensures that creditors, including depositors with higher balances, get paid progressively as we recover more funds from the disposed assets,” he explained.
Experts in the banking sector have lauded the NDIC’s swift response, emphasizing that the liquidation process serves as a cautionary tale about financial mismanagement in Nigeria’s banking industry.
“The Heritage Bank situation underscores the need for stronger regulatory oversight and risk management in the financial sector,” said financial analyst John Uche. “While the NDIC’s intervention is commendable, efforts should also be made to prevent future bank failures by addressing systemic weaknesses.”
Depositors Advised to Claim Funds
As the reimbursement process continues, NDIC has urged affected depositors who have not yet received their funds to come forward with necessary documentation to facilitate payment.
“Customers who are yet to be paid should visit NDIC offices with proof of ownership of accounts to process their claims,” Hassan said.
Many affected customers have expressed relief over NDIC’s efforts, but concerns remain about the fate of depositors with large balances that exceed recoverable funds.
“My entire savings was with Heritage Bank, and while I received the insured N5 million, I’m still waiting for the rest,” said Lagos-based businessman Tunde Aluko. “I hope NDIC will expedite the remaining payments because people have businesses and families to take care of.”
The NDIC has assured that creditors, including large depositors, will be compensated as soon as possible, based on available recoveries from asset sales.
A Wake-Up Call for Nigeria’s Banking Sector
The collapse of Heritage Bank has sparked fresh debates about the resilience of Nigeria’s banking industry. While the NDIC and CBN have reiterated their commitment to safeguarding depositors’ interests, financial experts believe more stringent measures are needed to prevent bank failures.
“There needs to be increased regulatory oversight to ensure banks operate within healthy financial thresholds,” said economist Dr. Funke Adebayo. “The Heritage Bank case is another reminder that banks should not be allowed to operate recklessly until they collapse.”
As Nigeria continues its economic recovery efforts, ensuring financial stability remains a top priority for regulatory authorities. The liquidation of Heritage Bank may serve as a crucial lesson on the need for better risk management, stricter enforcement of banking regulations, and improved public awareness about financial safety measures.
For now, depositors of the defunct bank can only hope that the proceeds from the asset auctions will be sufficient to recover more of their lost funds. The NDIC, on its part, has vowed to remain transparent and accountable as it carries out the liquidation process to its conclusion.
