Heritage Bank management’s effort at attracting strategic investors to pull the lender back from the brink seems futile.
Those close to the bank fear if urgent steps are not taken, the Nigerian banking community may soon lose another bank as things have been turning south for Heritage Bank, one of Nigeria’s promising banks, which began banking operations in 2013.
In December 2012, the Central Bank of Nigeria (CBN) re-issued Societe Generale’s banking licence, but as a regional bank. Having acquired the banking licence, the new ownership re-branded the bank as Heritage Banking Company Limited and opened for business under the new name on March 4, 2013.
In October 2014, Heritage Banking Company Ltd successfully met the requirements of the Asset Management Corporation of Nigeria (AMCON) and the Central Bank of Nigeria toward owning 100% shares in Enterprise Bank Ltd.
On January 27, 2015, AMCON officially transferred ownership of Enterprise Bank Ltd to Heritage Bank Plc.
Investigation revealed that the bank has been grappling with several issues which were seen as normal but these took alarming status about five years ago.
In the last five years and under its first chief executive, Dr. Iffie Sekibo, the bank has been struggling to keep afloat and has failed stress tests on several occasions.
A top banker and a former executive director in the bank, who prefers anonymity, said the bank has been looking for strategic investors for about five years ago but failed in getting one.
He said, “Heritage Bank was meant to play big and give Tier1 banks a big chase but this couldn’t happen because the bank took some wrong steps along the line.
“Some investors who had shown interest over the years have been retracting after checking the books. The bank is highly indebted and no serious investor will want to do business with an ailing bank”.
An investigation by Daily Independent revealed that the bank is one of the few banks that failed the stress test by the Central Bank of Nigeria with an instruction to look for “strategic” investors.
The major issue is that of high indebtedness.
The bank, according to the investigation, has loans or debt obligations to fulfill and this is weighing down its operations.
When our correspondent asked for the extent of the debt crisis, our source said, “The bank needs an injection of funds. If you inject N600 billion into the operations of the bank today, it will not be enough. How many investors will be ready to pump close to a trillion naira into the bank?
“This will be a tall dream”.
Significantly, the bank is said to be indebted to FirstBank which serves as a clearing bank to the CBN and has been visiting the CBN’s special window, the Standing Lending Facility (SLF).
SLF is the special lending window where banks go when they have liquidity issues and recently, more banks have been relying on it for liquidity.
Borrowing from the apex bank’s Standing Lending Facility increased month-on-month (MoM) by 559 percent to N376.64 billion in November from N57.14 billion in October 2023.
Details from the CBN financial data for November 2023 showed that bank deposits in the apex bank’s Standing Deposit Facility also declined MoM by 18 percent to N2.4 trillion in November from N2.94 trillion in October.
An investment banker, Isiaka Kuwaj, said those who are knowledgeable about banking have suggested to the CBN to rescue the bank from collapse but this was not adhered to.
He said, “If the CBN was talking about banks who may not be able to play in the envisioned new economy, Heritage Bank is one of them. The bank is losing its grip and it must be rescued to safeguard depositors’ funds.
“If you look critically at the bank and its operations, you will see that there is a systemic manipulation of processes. The new leadership of the bank, led by Taylor, seems not to have the magic wand to turn the bank around.
“Since the retirement of Dr. Sekibo, the bank has gone to sleep and it may remain in its slumber state if nothing is done to sell the bank or bring in fresh investors with clear ideas of operating a bank”.
The board of directors of the bank under the leadership of Mr. Akinola George-Taylor as the substantive Managing Director/ Chief Executive Officer of the bank which promised to implement the lender’s next phase of transformation, Daily Independent learnt, is still optimistic that the bank will soon attract a strategic investor in the desire to turn it around.
When contacted on Wednesday, Ozena Utulu, Group Head, Corporate Communications of the bank, said the bank is “making progress” in their discussion with investors.
CBN Assures Depositors Funds Are Safe
Meanwhile, the Central Bank of Nigeria (CBN) has dispelled rumours that Nigerian banks are distressed, insisting that the depositors’ funds are safe and sound.
The apex bank, in a statement signed by Mrs. Sidi-Ali Hakama, the Acting Director, Corporate Communications, which was made available to newsmen in Abuja, encouraged the public to continue their regular activities without being alarmed by reports that have not emanated from the CBN.
“The Central Bank of Nigeria (CBN) has noticed reports, in certain media outlets, about a recommendation for the Federal Government to take over some CBN-supervised financial institutions.
“For the avoidance of doubt, Nigerian banks remain safe and sound.
“The CBN encourages the public to continue their regular activities without being alarmed by reports that have not emanated from the CBN about the health status of Nigerian banks.
“The CBN is fully equipped to carry out its statutory duty of upholding a stable financial system in Nigeria.
“We assure the general public and depositors about the safety of their funds in Nigerian financial institutions. Bank customers are therefore advised to proceed with their banking transactions as usual, as there is no cause for concern”.
Curled From:Independent Newspaper Nigeria
