The Central Bank of Nigeria (CBN) has revoked the operating licences of two prominent mortgage institutions
Aso Savings and Loans Plc and Union Homes Savings and Loans Plc. This decisive move aims to enforce discipline within the Nigerian financial system.
According to the apex bank, the regulatory crackdown is part of a renewed drive to clean up the mortgage sub-sector. By taking this action, the CBN intends to ensure strict adherence to banking laws and prudential guidelines across the country.
Reasons for the Licence Revocation
Mrs. Hakama Sidi Ali, the CBN’s Acting Director of Corporate Communications, released a statement on Tuesday regarding the enforcement. Specifically, the licences were withdrawn due to persistent regulatory failures. These failures jeopardized depositors’ funds and threatened the overall stability of the institutions.
The CBN highlighted several critical infractions:
- Capital Shortfalls: Both banks failed to maintain the minimum paid-up share capital required for their licences.
- Insolvency Risks: Regulators found that the banks had insufficient assets to cover their liabilities.
- Critical Undercapitalization: Capital adequacy ratios fell well below the minimum levels prescribed by the CBN.
- Non-Compliance: Both institutions repeatedly ignored regulatory directives and obligations.
The Legal Framework for Enforcement
The CBN clarified that it exercised its statutory powers under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020. Additionally, the move aligns with Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria.
Mrs. Sidi Ali noted that the continued operation of these banks posed a significant risk. “The affected institutions violated various provisions of BOFIA 2020,” she stated. Consequently, the regulator had to intervene to protect the wider financial system.
Restoring Confidence in the Mortgage Sector
This action is not merely punitive. Instead, it is part of a broader strategy to reposition the mortgage banking sector.
The primary goal is to restore stakeholder confidence. By ensuring only financially sound institutions remain, the CBN hopes to create a safer environment for all Nigerians.
Furthermore, the Nigeria Deposit Insurance Corporation (NDIC) has been appointed as the liquidator. Depositors are advised that the NDIC will begin the verification and payment of insured deposits immediately.
Note for Depositors: The NDIC will pay insured sums up to ₦2,000,000 per depositor. Funds exceeding this amount will be paid as “liquidation dividends” once the banks’ assets are sold.
The CBN reiterated its resolve to enforce standards across all market segments. “We remain committed to our core mandate of ensuring financial system stability,” Sidi Ali assured.
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