THE Central Bank of Nigeria (CBN) has revoked the licenses of Aso Savings and Loans Plc and another bank, Union Homes Savings and Loans Plc, for violating guidelines in the Banks and Other Financial Institutions Act (BOFIA).

In a statement sent to Economy Post on Tuesday, the nation’s apex bank said the two mortgage banks failed to meet the minimum paid-up share capital requirement for the category of the bank licence granted to them and also breached several directives and obligations imposed upon them by the CBN.

The CBN’s Acting Director, Corporate Communications Department, Ms Hakama Sidi Ali, said the apex bank acted in line with its mandate to promote compliance with relevant laws and regulations in the sub-sector.

“As part of its efforts to re-position the mortgage sub-sector and promote a culture of compliance with relevant laws and regulations, the Central Bank of Nigeria, in exercise of the powers conferred on it under Section 12 of BOFIA 2020, and Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria has revoked the licenses of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc.”

“The affected institutions had violated various Sections of BOFIA 2020 and the Revised Guidelines for Mortgage Banks in Nigeria, including:
(a) Failure to meet the minimum paid-up share capital requirement for the category of the bank licence granted to them by the CBN. (b) Having insufficient assets to meet their liabilities; (c) Being critically undercapitalised with a capital adequacy ratio below the
prudential minimum ratio as prescribed by the CBN; and (d) Failure to comply with several directives and obligations imposed upon them by the CBN.”

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The CBN said it remained committed to its core mandate of ensuring financial system stability.

According to the CBN Guidelines for Mortgage Banks, a minimum capital adequacy ratio of 10 percent against risk assets is required for banks in the industry. There must be also minimum of 50 percent of mortgage assets to total assets.

Heritage Bank

In June 2024, the CBN revoked the banking license of Heritage Bank, appointing the Nigerian Deposit Insurance Corporation (NDIC) as its liquidator.

In a statement sent to Economy Post, the CBN said the revocation was in accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of BOFIA 2020. The apex bank said the revocation of the bank’s licence of Heritage Bank Plc was with immediate effect.

“This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA,” CBN said in a statement signed by Acting Director of Corporate Communications, Ms Hakama Sidi Ali.

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“The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability,” CBN said.

“This follows a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline. Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby
making the revocation of the license the next necessary step.”

Ms Ali further said the CBN had taken this action to strengthen public confidence in the banking system and ensure that the soundness of our financial system was not impaired, noting that NDIC had been appointed as the liquidator of the bank in accordance with Section 12 (2) of BOFIA, 2020.

“We wish to assure the public that the Nigerian financial system remains on a solid footing. The action we are taking today reflects our continued commitment to take all necessary steps to ensure the safety and soundness of our financial system.”