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SEC Investigates Fund Managers’ Financial Exposure to Heritage Bank After Licence Revocation

SEC has commenced an investigation to assess potential implications of Heritage Bank’s license revocation on the capital market.

The  Securities and Exchange Commission (SEC) has said it has commenced an investigation into fund managers’ exposure in Heritage Bank Limited after the Central Bank of Nigeria (CBN ) revoked the operating licence of the financial institution.

The Head, Monitoring Department, SEC, Mr. Tarfa Makyur in a signed circular  to the President, Fund Managers Association of Nigeria (FMAN), dated June 14, 2024 stated that the commission is currently assessing the potential implications of the CBN’s decision to invoke the operating licence of Heritage Bank on the capital market.

Makyur on behalf of Director-General, SEC, Dr Emomotimi Agama in the circular requested that members of the FMAN provide detailed information on their level of exposure to Heritage Bank in request of proprietary funds and client funds.

He, however, urged them that the needed information must be submitted to the commission on later than June 30, 2024

“The commission appreciates your prompt cooperation and assistance in this matter,” the circular added.  

The CBN early this month disclosed that the board and management of the bank had not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability.

“This follows a period during which the CBN engaged with the bank and prescribed various supervisory steps intended to stem the decline.

“Regrettably, the bank has continued to suffer and has no reasonable prospects of recovery, thereby making the revocation of the license the next necessary step,” the acting Director, Corporate Communications, CBN, Mrs. Hakama Sidi Ali had explained in a statement.

The CBN had noted that the action taken was to strengthen public confidence in the banking system and ensure that the soundness of the financial system is not impaired, stressing that Nigeria Deposit Insurance Corporation (NDIC) was appointed as the liquidator of the bank in accordance with Section 12 (2) of BOFIA, 2020.

The Managing Director of NDIC, Mr. Hassan Bello had said preliminary investigations showed that the failed bank had about N650 billion total deposits which he said could be more because there could be other deposits that were not immediately ascertained.

The NDIC MD also said the bank has a total of 2.3 million depositors with 99.9 per cent having a balance of less than N5 million deposits with the bank, while only about 1 per cent had deposits above N5 million. 

Kayode Tokede

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