The Central Bank of Nigeria (CBN) has withdrawn the operating licences of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc, marking another decisive step in its ongoing effort to restore discipline and stability within Nigeria’s mortgage banking sub-sector.
In a statement, the CBN’s Acting Director of Corporate Communications, Hakama Sidi-Ali, said the action aligns with the apex bank’s broader reform agenda aimed at repositioning the mortgage industry and enforcing strict compliance with banking laws and prudential standards.
Why the Licences Were Revoked
According to the CBN, the revocation was carried out pursuant to Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020 and Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria.
The apex bank cited multiple infractions by the affected institutions, including:
- Failure to meet minimum paid-up share capital requirements for their licence category,
- Insufficient assets to cover liabilities,
- Critical undercapitalisation, with capital adequacy ratios below regulatory thresholds, and
- Persistent non-compliance with supervisory directives issued by the CBN.
The regulator noted that these weaknesses rendered the banks unable to operate in a safe and sound manner, posing risks to depositors and the financial system.
A Brief History of Bank Licence Revocations in Nigeria
Licence revocation is not new in Nigeria’s banking history. Since the late 1990s, the CBN has periodically withdrawn licences of banks and finance houses that failed to meet prudential standards, particularly during periods of systemic stress.
Notable episodes include the post-consolidation clean-up of the mid-2000s, the banking crisis of 2009, which led to the removal of several bank management teams, and more recent interventions targeting microfinance banks, primary mortgage banks and finance companies with weak governance and capital positions.
In each cycle, the objective has remained consistent: protect depositors, preserve confidence and prevent systemic contagion, even at the cost of allowing weak institutions to exit the system.
Regulatory Signal to the Mortgage Sub-Sector
The latest revocation action underscores the CBN’s determination to tighten oversight of mortgage banks, a segment that plays a critical role in housing finance but has historically struggled with thin capital buffers and poor risk management.
By enforcing licence revocation where necessary, the apex bank is signalling that regulatory tolerance for persistent breaches has narrowed, particularly as Nigeria seeks to deepen long-term housing finance and attract institutional capital into the sector.
BRANDECONOMY Insight
The revocation of Aso Savings and Union Homes’ licences reflects a hardening regulatory posture in Nigeria’s financial system. While closures often attract public anxiety, history shows that systemic stability is best preserved when weak institutions are allowed to fail in an orderly manner. For the mortgage sub-sector, the message is stark: sentiment and legacy no longer substitute for capital, governance and compliance. For policymakers, the enduring challenge remains building an ecosystem where mortgage banks are strong enough to finance housing growth—without relying on regulatory mercy to survive.
