NDIC Vows to Recover N700 Billion from Defunct Heritage Bank, To Begin Payment to Depositors

Managing Director/Chief Executive of Nigeria Deposit Insurance Corporation (NDIC), Mr. Bello Hassan, has vowed to employ all resources at its disposal to recover over N700 billion loans and advances owed to the defunct Heritage Bank Plc, whose operating license was recently revoked by the Central Bank of Nigeria (CBN).

Hassan said NDIC had the responsibility to recover all debts as well as pay eligible depositors and creditors. He also said payment of insured deposits to customers of the failed bank would commence this week, rather than the 30 days prescribed by the NDIC Act.

According to him, 2.3 million insured depositors have balances less than N5 million, while 4,000 depositors have N5 million and above.

He explained that for the insured deposits, the insured amount remained only N5 million – following the recent upward review of minimum deposit cover. He said the corporation did not need to wait until it realised the assets of the failed bank before paying the beneficiaries. 

Hassan revealed that 99.9 per cent of the bank’s depositors owned less than N5 million – making it possible to pay their full deposit cover. He urged the creditors to file their claims.

Hassan said, “We would pay it immediately from the Deposit Insurance Fund, which we have built over the years through annual assessment of premiums balance paid by these banks.”

He further disclosed that at the time of takeover of the distressed bank, the corporation found deposits to the tune of N650 billion, adding that the figure may be higher by the time its examiners conclude ongoing assessments.

However, he said it would be difficult to give a timeframe for payment of uninsured depositors – deposits of staff and management of the failed bank – as the assets of the bank will have to be sold before payment could be determined.  

He added that deposits used as collateral for loans also fell under the uninsured category.

He said NDIC was ready for possible litigation resulting from the liquidation process, adding that it is also gathering evidence in this regard.

Hassan said the corporation was already engaging the judiciary for support towards ensuring an accelerated hearing of the cases, stressing that depositors tend to suffer when cases are delayed.

He maintained that NDIC had a duty to recover and pay depositors, and was moving as quickly as possible to realise this objective.

The NDIC chief executive also admitted that historically, the corporation had encountered significantly low loan recovery rates for failed banks.

But he said this time around, the NDIC Act 2023 had granted additional powers to the corporation to deal with debtors.

He said, “The most important thing is to recover them as quickly as possible and we are going to leverage the powers given to us under the Act to do that.”

He said contrary to suggestions that the revocation of the bank’s license was politically-motivated, it was purely a regulatory action for which the apex bank had issued clarifications.

James Emejo

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