Will Heritage Bank’s N700 Billion Loan Affect Customers’ Funds?

In the aftermath of Heritage Bank’s license revocation by the Central Bank of Nigeria (CBN), concerns are mounting over the potential impact on customers’ deposits.

This is more so in light of the Nigerian Deposit Insurance Corporation’s (NDIC) disclosure of an estimated N700 billion in outstanding loans owed to the dying bank.

Speaking at a press conference in Abuja on Wednesday, Bello Hassan, NDIC Managing Director, revealed that Heritage Bank holds N650 billion in depositor funds, but assured that the expected N700 billion from loan recoveries should cover all verified depositor claims.

What Hassan said:

“From our preliminary assessment, we have found out that Heritage Bank has N650bn deposits and loans is about N700bn and if we recover this amount, no depositor will lose their deposit.

“We assure depositors that there is no need to panic and tat they will get their money back.

“We need to move as quickly as possible and we are doing that. I can assure you that all the payments will commence this week for the insured deposits.

“We will leverage the bank verification number (BVN) to identify alternate bank accounts of the depositors to pay the maximum amounts of N5 million. While customers without alternate accounts should visit branches of the bank.”

What If the NDIC Fails to Recover the Loans?

The NDIC’s plan hinges crucially on the successful recovery of the N700 billion in loans. If these efforts fall short, the repercussions could be significant for customers whose funds exceed the insured limit of N5 million.

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Currently, the NDIC guarantees full repayment up to this amount, which protects approximately 99.9% of the bank’s 2.3 million depositors.

However, the fate of the remaining 0.1%, approximately 4,000 depositors with more than N5 million in their accounts, hangs in the balance.

But Hassan assured they would be repaid: “They will get N5 million now and more later when the NDIC gets more money from the bank’s assets and loans.”

Despite the assurances, some of the depositors are still concerned that they could lose their money if the NDIC cannot recover the full amount from the bank’s debtors.