The Nigeria Deposit Insurance Corporation (NDIC) has announced the start of an auction process for the properties and assets of the now-defunct Heritage Bank, scheduled to commence on Wednesday, December 4, 2024.
This strategic move is intended to support the declaration and payment of liquidation dividends to uninsured depositors, following the bank’s closure and license revocation.
Bashir A. Nuhu, NDIC’s Director of Communication and Public Affairs, highlighted in a statement issued on Sunday that this auction aligns with the corporation’s statutory obligations as outlined in Section 62(1)(d) of the NDIC Act, 2023.
The announcement follows previous NDIC-led asset disposals, which included the liquidation of movable assets from the bank’s various leased branches across the country.
The upcoming auction will be a competitive sealed bidding process taking place in six major Nigerian cities: Abuja, Lagos, Bauchi, Kano, Enugu, and Port Harcourt. These locations will cover Heritage Bank’s 36 branches, and the NDIC is particularly urging financial institutions to participate.
The goal is to ensure banking services continue in these areas, a measure aimed at promoting financial inclusion. “Preference will be given to financial institutions willing to pay the highest value, ensuring the continuity of banking services at strategic locations,” NDIC stated.
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Analysts view this liquidation strategy as a sound approach for maximizing asset recovery and expediting the payment of dividends to uninsured depositors. Dr. Olufemi Adeyemi, a financial analyst at BlueStone Capital, commended the NDIC’s strategy: “This initiative underscores the NDIC’s commitment to preserving financial stability and depositor confidence. Allowing participation from both corporate and private bidders introduces healthy competition that could optimize asset value recovery.”
Prospective bidders are invited to inspect the available properties a week before the auction starts. To qualify for participation, bidders must submit a bid security equivalent to 10 per cent of their proposed bid amount. This prerequisite is designed to ensure only serious participants take part, reinforcing transparency and accountability, key tenets of the NDIC’s mission.
The funds obtained from the auction will go towards augmenting the payout of liquidation dividends to eligible claimants. This development comes after the Central Bank of Nigeria (CBN) revoked Heritage Bank’s banking license in June 2024 due to persistent financial distress and non-compliance with regulatory mandates as stipulated in Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
Despite efforts by the CBN to stabilize the bank’s operations through various supervisory measures, Heritage Bank’s continued poor performance posed systemic risks to the broader financial ecosystem.
So far, the NDIC has successfully paid out 82.36 per cent of the total insured deposits to Heritage Bank’s customers, demonstrating its ongoing commitment to protecting depositors and maintaining sector stability.
Experts, including Adeyemi, believe that proceeds from this auction will further reinforce the NDIC’s capacity to disburse dividends to remaining depositors and bolster confidence in Nigeria’s banking industry.
This auction is expected to mark a significant step in the NDIC’s efforts to manage bank liquidations effectively and support the overall health of the nation’s financial system.