Amidst rising concerns by bank customers about the financial state of Heritage Bank, one of Nigeria’s Deposit Money Banks (DMBs), the bank says all is well.
According to a recent statement by Ozena Utulu, its Corporate Communication Manager, Heritage Bank said it has embarked on long-term sustainability plans premised on restructuring the bank, ensuring cost efficiency, and management of its assets.
It, however, confirmed reports that it had reduced its workforce, adding that the staff affected had been duly compensated. Listed among local lenders ring-fenced by the apex bank, Heritage Bank has continued to face going concern pressures over the years.
Questions over financial health of the bank had prompted the Central Bank of Nigeria (CBN) to reassure Nigerians sometime ago that the bank was not distressed.
In its last Monetary Policy Committee meeting in July, the apex bank pointed out that there was relative stability in key financial soundness indicators and resilience of Nigerian banks.
However, some customers of Heritage Bank, who still struggle with poor customer service, delayed transfers, inability to move depositor funds and failure of the bank’s apps continue to express concern.
Meanwhile, a financial expert, Mr Godwin Unegbu, said that most Nigerian banks faced challenges due to certain unethical practices.
Unegbu, a past president of the Chattered Institute of Bankers of Nigeria (CIBN), said that Heritage Bank inherited the liabilities of the several distressed banks it had acquired.
“Most of those banks had their own baggage which were accumulated through bad debt.
“When Nigerians borrow from the banks, they think that the money is national cake. They are always reluctant to pay back and that has been part of the problems of the banks.
“All the banks have that problem, it is just those that are able to get more and more deposits funding them that will not have the problem of distress, ” he said.
Unegbu said that the CBN had saved many DMBs from distress over the years.
He urged the apex bank to focus on the Microfinance Banks, which would directly benefit the masses, especially in rural areas.
He, however, urged the CBN to carry out proper due diligence examination of Heritage Bank and any other bank that appears to be challenged.
“The examiners will look at all parameters of the bank to establish its level of vulnerability.
“If such test proves that the bank will not survive, it should simply be handed over to the Nigeria Deposit Insurance Corporation,” he said.
Also, a university don, Prof. Uche Uwaleke, said that only the CBN wss in a position to declare the financial soundness or otherwise of any bank.
Uwaleke, the Director, Institute of Capital Market Studies, Nasarawa State University Keffi, said that the apex bank had consistently maintained the financial soundness of DMBs.
“This is especially in relation to capital adequacy, liquidity ratios, and non-performing loans.
“If a stress test on Heritage Bank provides a reason for CBN intervention, I believe it will do so in order to avoid a contagion effect, as well as protect depositors and shareholders.
“A number of resolution options are available in such circumstances including assisted merger and acquisition, bridge bank option, bail-out option, and assisted recapitalisation of the bank,” Uwaleke said.