Heritage Bank: NDIC to pays customers with above 5m depositors through liquidation dividends
By Matthew Denis
The Nigeria Deposit Insurance Corporation (NDIC) has successfully paid approximately 84.98 percent of Heritage Bank customers whose accounts were linked with Bank Verification Numbers (BVN).
During the opening session of the 2024 NDIC Business Editors and Finance Correspondents Association of Nigeria (FICAN) workshop held in Lagos, NDIC Managing Director and Chief Executive Officer, Mr. Bello Hassan, highlighted this achievement.
He expressed, “I am delighted to be among this esteemed group of professionals who have consistently shown an unwavering commitment to educating the public on financial matters, especially the critical role of the Nigeria Deposit Insurance Corporation (NDIC) in ensuring the stability of our financial system.”
Discussing the theme of this year’s workshop, “Strengthening Nigeria’s Financial Safety-Net – The Role of Deposit Insurance,” Mr. Hassan emphasised its timely relevance given the evolving dynamics of the global financial system and its implications for Nigeria.
He stated, “As our financial system continues to evolve and face new challenges, the NDIC remains steadfast in its mission to protect depositors and collaborate with the Central Bank of Nigeria (CBN) in ensuring the stability of the banking sector, which is critical to the growth and development of the economy.”
Mr. Hassan detailed the recent closure of Heritage Bank, following the revocation of its licence by the CBN on June 3, 2024. He said this event underscores the NDIC’s essential role in safeguarding depositors.
Acting in accordance with the relevant provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the NDIC Act 2023, the NDIC was appointed liquidator to manage the orderly resolution of the bank and oversee the payment of its depositors and other claimants.
“In the discharge of this critical role of depositor reimbursement,” Mr. Hassan noted, “the Corporation began the payment of the insured deposits of N5 million maximum per depositor within a record time of four days of the bank’s closure. This was achieved using Bank Verification Numbers (BVN) as a unique identifier to locate depositors’ alternate accounts in other banks without the need to fill forms or visit the NDIC offices.”
He added, “This innovative approach has indeed enabled the payment of 84.98 percent of depositors with BVN linked accounts to date. The prompt payment of depositors, coming at a time when the Corporation had also recently increased the deposit insurance coverage from N500,000 to N5 million in Deposit Money Banks, significantly cushioned the negative impact of bank failure, especially during the current challenging economic climate.
“This achievement is consistent with the provisions of the International Association of Deposit Insurers (IADI) Core Principle 15, which emphasises timely payouts to depositors of failed banks.”
Mr. Hassan assured that the Corporation is committed to reimbursing depositors with balances exceeding N5 million, stating, “These uninsured deposits represent a significant portion of the total deposits in Heritage Bank. In this regard, the Corporation is already working assiduously to ensure that all depositors with amounts in excess of the maximum insured amount of N5 million are paid through liquidation dividends from the realisation of the defunct bank’s assets and recovery of debts.”
He elaborated, “The Corporation has already initiated the process of debt recovery and realisation of investments and physical assets of the defunct bank to ensure timely payment of the uninsured deposits.” Furthermore, he explained that the NDIC’s responsibilities extend to the creditors of the defunct bank, who will receive payments after all depositors have been fully reimbursed.
“This orderly process, based on asset realisation and priority of claims, is essential in maintaining public trust in the banking system and promoting financial stability,” he emphasised. “The handling of the Heritage Bank liquidation illustrates the broader role of the NDIC in ensuring that even in times of financial disruption, depositors can rest assured that their funds are protected.”
Mr. Hassan underscored the importance of the media and civil society groups, along with corporate affairs managers of banks, in advocating for the effective implementation of the deposit insurance system.
“Through your efforts, the achievements of the NDIC have become more visible and better understood, reinforcing the Corporation’s enduring impact in contributing to the stability of the financial system. By working together, we can continue to build a more resilient financial system that protects the interests of all stakeholders.”
He concluded by encouraging attendees to maintain close engagement with the NDIC, stating, “I encourage you all to take full advantage of the opportunity to share insights, ask questions, and explore ways to further strengthen one of Nigeria’s financial safety-nets.”
