Reps ask CBN to probe management of Heritage Bank

The House of Representatives on Tuesday urged the Central Bank of Nigeria (CBN) to conduct a thorough investigation of the leadership and management of Heritage Bank with a view to identify any possible issues of mismanagement or wrongdoing that may have contributed to the bank’s failure.

The resolution was passed sequel to the adoption of a motion on urgent national importance on the need to protect depositors sponsored by Hon. Uchenna Harris Okonkwo, who underscored solicited for the House intervention.

In his lead debate, Hon. Okonkwo stated, “The House notes with the utmost gravity, it is acknowledged that the Federal Government of Nigeria diligently upholds its solemn obligation to safeguard and nurture the lives and welfare of its esteemed citizens, displaying unwavering dedication to ensuring their safety, security, and general well-being, regardless of their geographical whereabouts, given recent developments surrounding the Heritage Bank, the government expresses profound and unwavering concern for the welfare and prosperity of its treasured citizens, particularly depositors who have placed their trust in financial institutions, emphasizing the critical need for strong regulatory oversight to protect their interests.

“The House notes that on June 3, 2024, the Central Bank of Nigeria (CBN) publicly declared the revocation of Heritage Bank’s license, citing its violation of Section 12 (1) of the Banks and Other Financial Institutions Act (BOFIA), 2020, Consequently, the CBN designated the Nigerian Deposit Insurance Corporation (NDIC) as the entity responsible for overseeing the liquidation process.

“The House further notes that the Nigerian Deposit Insurance Corporation (NDIC) has initiated the liquidation process of Heritage Bank Plc in accordance with Section 55, sub-sections 1 and 2 of the NDIC Act 2023.

“The corporation has swiftly commenced the liquidation procedures of the failed bank, prioritizing immediate verification and disbursement of insured deposits to the bank’s depositors.

“The House is aware that the NDIC has initiated the liquidation process, which regrettably limits the verification and payment of depositors to a maximum insured amount of only N5 million.

“The House is further aware that the NDIC, in its statement dated June 3, 2024, has specified that depositors with funds surpassing N5 million will receive liquidation dividends only after the realisation of the bank’s assets and the retrieval of debts owed to the bank.

“The House is also aware that some depositors allegedly entrusted significant sums, amounting to in excess of N10 billion only, to Heritage Bank, representing their hard-earned savings and financial security, this realization underscores the magnitude of the financial losses and uncertainties they are now facing, highlighting the profound impact of the bank’s failure on their lives and well-being.

“The House is concerned that amidst the prevailing economic challenges in Nigeria, the financial stability of its citizens has been significantly compromised, limiting compensation to N5 million is deeply inadequate to alleviate the substantial losses experienced by depositors who had placed their trust in Heritage Bank, exacerbating their financial distress and uncertainty.

“The House is also deeply concerned about the CBN’s failure to promptly disclose the financial instability of Heritage Bank, which has left depositors vulnerable to unexpected financial losses, this lack of transparency has not only eroded public trust in the banking system and regulatory bodies but has also intensified the distress and uncertainty faced by depositors who relied on the bank for their financial security.

“The House is further deeply concerned by allegations suggesting that the CBN had prior knowledge of the bank’s deficiencies for an extended period but failed to enact timely corrective measures, this underscores the pressing need for a thorough review of regulatory oversight mechanisms, as it is unjust for depositors to suffer the consequences of regulatory inaction. Such a review is essential to restoring confidence in the regulatory framework and ensuring the protection of depositors’ interests,” he noted.

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To this end, the House also tasked NDIC to conduct a comprehensive review of its operations and the effectiveness of its mandate to ensure that it is adequately equipped and resourced to fulfill its role as deposit insurer and investor of failed banks;

Similarly, the House affirmed the need for the National Assembly to strongly advocate for fair and compassionate compensation for depositors who have been adversely affected by the unfortunate failure of Heritage Bank, this may entail respectfully.

In the same vein, the House tasked NDIC and other pertinent authorities to carefully reassess the current compensation scheme, with a view to offering more meaningful relief to depositors who have experienced substantial financial losses.

The lawmakers also underscored the need for NDIC on limitations of the current deposit insurance coverage, the Federal House Of Representatives should consider regulatory amendments to increase the maximum insured amount to better protect depositors’ interests.

This adjustment, according to the House would provide greater financial security for depositors in the event of bank failures.

The lawmakers also tasked Federal Government on the establishment of a robust and well-funded depositors’ protection fund to provide greater financial security and assurance for depositors in the event of bank failures, and to facilitate timely and fair compensation for affected depositors;

Hence, the House mandated its Committee on Banking Regulations on the need to promote public awareness and education campaigns to inform citizens about the risks associated with banking and the importance of diversifying their financial holdings. This initiative aims to empower depositors to make informed decisions about their banking relationships and safeguard their financial well-being.

To this extent, the House mandated its Committee on Banking Regulations to collaborate with other relevant bodies to set up an investigation into the circumstances surrounding the Heritage Bank Case and submit its report within two weeks for further legislative action.

NIGERIAN TRIBUNE