The Central Bank of Nigeria (CBN) has settled the outstanding N400 billion debt owed to First Bank of Nigeria Limited by the now-defunct Heritage Bank, according to sources familiar with the matter. This development brings closure to a protracted dispute that has lasted several years.
In 2018, First Bank, acting as the clearing bank for Heritage Bank, discovered a significant discrepancy in the clearance of cheques, resulting in an unpaid amount of N200 billion. This revelation raised concerns about the financial stability of First Bank, prompting the intervention of the CBN.
The Former Governor, Godwin Emefiele offered a central bank guarantee on behalf of Heritage Bank, aimed at alleviating First Bank’s concerns and providing a safety net. However, the guarantee was not formalized, leading to a prolonged dispute.
Despite assurances from the then-Managing Director of First Bank, Adesola Adeduntan, the absence of a formal guarantee raised concerns among the bank’s board of directors. The debt eventually ballooned to N300 billion, exacerbating the financial strain on First Bank.
The CBN’s decision to settle the debt comes after the recent revocation of Heritage Bank’s license due to breaches of banking legislation and poor financial performance. The bank’s struggles with non-performing loans and capital deficits had raised concerns about its viability.
Depositors with funds up to N5 million will be paid using their Bank Verification Number (BVN) to locate alternate accounts, while those with funds exceeding N5 million will receive liquidation dividends upon realization of the bank’s assets and recovery of debts.
This resolution demonstrates the CBN’s commitment to maintaining financial stability and promoting confidence in the banking system. The settlement is expected to have a positive impact on First Bank’s financial position and the overall banking industry.
In a statement, First Bank’s Corporate Communications Manager, Ismail Omamegbe, confirmed the settlement, stating, “First Bank had exited the exposure, and CBN settled the bank.”
Industry analysts have welcomed this development, noting that it reinforces the CBN’s proactive approach to addressing systemic challenges and promoting a robust banking system.
This settlement marks a great development in the CBN’s efforts to strengthen the nation’s banking system and promote financial stability. The resolution is expected to have a positive impact on the entire financial sector, encouraging lenders to increase credit flows and support economic growth.
