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5 Nigerian Banks, Besides Heritage Bank, with Revoked Licence by CBN

5 Nigerian Banks, Besides Heritage Bank, with Revoked Licence by CBN 

Significant regulatory actions and changes have been implemented in Nigeria’s banking industry with the goal of maintaining stability and safeguarding the interests of depositors. Revocation of bank licences is one of the most extreme actions taken by the Central Bank of Nigeria (CBN).

Here, we examine the background of five prominent Nigerian banks whose licences were withdrawn by the CBN, as well as the reasons behind their actions and the effects they had on the financial system.

1. Savannah Bank

Savannah Bank was an important contributor to the Nigerian banking industry. However, the bank’s licence was terminated by the CBN in 2002 due to insolvency and noncompliance with regulatory standards. Many depositors were left in a difficult situation when the bank’s assets were seized and operations were suspended.

In 2009, following an extended legal dispute and multiple court decisions, Savannah Bank’s licence was granted again. The bank has had difficulty regaining its previous status despite this.

2. Peak Merchant Bank

Peak Merchant Bank, which was founded as a merchant bank, suffered a similar fate in 2003 when the CBN seized its licence. The primary reasons for this action were the bank’s inability to meet the new capital requirements set by the CBN and its failure to maintain adequate capital reserves.

The CBN’s larger initiative to fortify the banking industry by guaranteeing that every operational bank has a strong financial basis included this revocation.

3. Fortis Microfinance Bank

In 2018, Fortis Microfinance Bank, a significant player in the microfinance sector, had its licence revoked by the CBN. The bank’s financial instability and refusal to recapitalize as required by regulatory bodies served as the foundation for the judgement.

Fortis’s demise resulted from its inability to pay its debts to creditors and depositors. This action demonstrated the CBN’s dedication to making sure microfinance banks follow the same strict standards as their commercial counterparts.

4. Afribank PLC

One of Nigeria’s oldest banks, Afribank Nigeria PLC, had its licence revoked in 2011 as part of a broad banking industry reform that the CBN started. The bank’s operating problems had gotten out of hand, and it was declared insolvent.

As a result, the CBN created Mainstreet Bank to assume Afribank’s debts and assets. This action was a component of a larger plan to clean up the banking industry and win back the trust of investors and depositors.

5. Skye Bank

One of the most well-known instances of licence revocation in recent memory is the case of Skye Bank. The CBN revoked Skye Bank’s licence in 2018 because of the bank’s continuous financial instability and incapacity to meet capital standards.

The CBN has been intervening in the bank since 2016, but its attempts to improve its situation were fruitless. In order to maintain service continuity and safeguard depositors, the CBN formed Polaris Bank to assume the obligations and assets of Skye Bank.

The CBN’s capacity to revoke bank licences is a vital regulatory instrument for preserving integrity and stability in Nigeria’s banking industry. Even though there was a lot of turbulence when banks like Savannah Bank, Peak Merchant Bank, Fortis Microfinance Bank, Skye Bank, and Afribank closed, these steps were required to safeguard depositors and maintain the stability of the financial system as a whole.

The prompt actions taken by the CBN underscore the significance of stringent compliance with regulatory mandates and prudent financial management in guaranteeing the robustness of the banking industry. The lessons learned from these revocations are still applicable to financial firms and regulators as the Nigerian economy develops.

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