The Nigeria Deposit Insurance Corporation (NDIC) has commenced the payment of ₦46.6 billion in liquidation dividends to depositors of the defunct Heritage Bank Plc, marking a critical milestone in the financial sector’s ongoing stability and trust rebuilding efforts.
In a statement issued Sunday, Hawwau Gambo, Acting Head of Communication and Public Affairs at NDIC, explained that the funds being distributed were recovered through a combination of asset sales and debt recovery efforts following the bank’s collapse.
According to the Corporation, this round of payments represents the first tranche of liquidation dividends — distinct from the initial insured deposit reimbursement — and is targeted at depositors whose balances exceeded the NDIC’s insured limit of ₦5 million.
Under the current payout structure, qualified depositors are receiving 9.2 kobo per naira on a pro-rata basis, with further payments anticipated as more assets are realised and outstanding obligations are recovered.
Understanding the Liquidation Dividend
A liquidation dividend is the distribution of funds derived from the realisation of a failed institution’s assets, allocated first to uninsured depositors, then to other creditors and shareholders, in that order of priority. This mechanism provides an essential financial relief to depositors who, under NDIC insurance policy limits, were previously unable to recover the full value of their deposits.
The NDIC’s approach underscores a key principle: deposit insurance is not only about immediate payouts but also about structured recovery and value protection over time.
Strategic Use of Technology and Data
Significantly, the NDIC deployed the Bank Verification Number (BVN) system to locate depositors’ alternate bank accounts, automatically crediting insured sums — a process that has been praised as a model of operational efficiency in an otherwise complex liquidation exercise.
This digital integration reflects a broader trend in the Nigerian financial services ecosystem: regulatory bodies increasingly leveraging technology to enhance transparency, speed, and customer confidence in crisis management.
Heritage Bank Depositors without alternate bank accounts or those who did not automatically receive payments have been advised to visit NDIC offices or download verification forms from the Corporation’s website to facilitate their claims.
Sectoral Implications: Heritage Bank’s Collapse and Beyond
The liquidation of Heritage Bank, following the revocation of its licence by the Central Bank of Nigeria (CBN) on June 3, 2024, sent ripples through the banking industry, exposing deep-seated vulnerabilities in Nigeria’s mid-tier banking segment.
Although Heritage Bank’s failure was largely anticipated by insiders — due to years of mounting non-performing loans, weak corporate governance, and liquidity challenges — the swift regulatory intervention by the CBN and NDIC is seen as an important case study in crisis containment.
Analysts note that maintaining depositor confidence is crucial to preventing systemic risks, especially in an economy striving to deepen financial inclusion and attract new investments.
Moreover, the ongoing asset recovery efforts and liquidation process will serve as a litmus test for future bank resolutions in Nigeria, particularly as the regulatory landscape becomes more proactive in enforcing stricter risk management and prudential standards.
Looking Ahead: A Fragile but Stabilising Banking Sector
While the broader banking sector remains resilient — buoyed by recent capital adequacy reforms and enhanced corporate governance directives from the CBN — Heritage Bank’s demise is a stark reminder that prudential regulation and effective supervision must remain non-negotiable.
For depositors, the NDIC’s structured approach provides reassurance that deposit protection mechanisms are functional, though the reality of partial recoveries highlights the importance of continued vigilance by both regulators and banking customers.
As Nigeria’s financial system evolves amidst ambitious economic reforms and digital transformation, events like these underscore the ongoing balancing act between fostering innovation, driving growth, and ensuring the safety and soundness of financial institutions.
