Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria (CBN), has said that the recent revocation of Heritage Bank’s licence comes as no surprise, News About Nigeria reports.
In a statement posted on his X account on Wednesday, Moghalu said, “The revocation of the banking licence of Heritage Bank by @cenbank is the chronicle of a death foretold. In other words, it’s not surprising.”
Moghalu said that the revocation should not cause alarm or suggest instability within the financial system.
According to him, the most important thing is to protect depositors’ funds.
“Banks are businesses, even if very special and thus heavily regulated ones. A bank that is badly run should not have a lifetime guarantee. The important thing is to protect depositors’ funds,” he noted.
Reflecting on his tenure at the CBN, Moghalu said the Asset Management Corporation of Nigeria (AMCON) was designed in 2010 to ensure systemic financial stability and prevent bank failures during the global financial crisis.
“We made sure no bank failed then to ensure systemic stability because of the unique situation of the global financial crisis. But over the long term, I never subscribed to a view that no bank, no matter how badly run, should ever fail. That would be a wrong approach to financial regulation,” Moghalu explained.
The CBN’s decision on June 4 to revoke Heritage Bank’s licence was attributed to the bank’s poor financial performance.
“The board and management of the bank have not been able to improve the bank’s financial performance, a situation that constitutes a threat to financial stability,” the CBN stated.
In response, the House of Representatives assured Heritage Bank customers that their funds were safe.
Akin Rotimi, the House spokesman, stated on Monday, pledging to engage with relevant stakeholders to protect depositors’ interests.
The House also acknowledged the appointment of the Nigeria Deposit Insurance Corporation (NDIC) as liquidator, in line with the Banks and Other Financial Institutions Act.
The House called for calm and tasked the CBN and NDIC with establishing effective communication systems to keep customers informed.
“We assure the public, particularly depositors and stakeholders of Heritage Bank, that the House is committed to carrying out its constitutional oversight functions to ensure that this development does not negatively impact Nigerians,” the statement read.
The House said that its priority is to safeguard depositors’ interests and maintain financial stability.
“We will engage with the CBN, NDIC, and other relevant stakeholders to ensure a transparent and orderly resolution process, providing necessary support to mitigate any potential negative impact on the public. We urge the CBN and NDIC to establish clear channels of communication to allay the fears of the public and prevent any loss of trust in our financial system. Effective public engagement is crucial to maintaining confidence during this period,” the statement concluded.
