Heritage Bank shutdown: Badly run bank shouldn’t have lifetime guarantee, says Moghalu

Moghalu’s statement is coming two days after the CBN revoked the banking licence of Heritage Bank due to the company’s “inability to improve its financial performance”.

On June 3, the Nigerian Deposit Insurance Corporation (NDIC) said it had taken over Heritage Bank as the appointed liquidator.

Commenting on the revocation via his official X handle on Wednesday, Moghalu said allowing a bank to fail does not mean the financial system in the country is not stable.

“The revocation of the banking license of Heritage Bank by CBN is the chronicle of a death foretold. In other words, it’s not surprising,” he said.

“I don’t think it should worry anyone, nor does it mean the financial system isn’t sound. Banks are businesses, even if very special and thus heavily regulated ones.

“A bank that is badly run should not have a lifetime guarantee. The important thing is to protect depositors’ funds.”

Citing why the Asset Management Corporation of Nigeria (AMCON) was established, Moghalu said the purpose of the agency was to ensure systemic financial stability.

“We made sure no bank failed then to ensure systemic stability because of the unique situation of the global financial crisis,” he said.

“But over the long term, I never subscribed to a view that no bank, no matter how badly run, should ever fail. That would be a wrong approach to financial regulation.”

On June 5, NDIC assured that all insured customers of Heritage Bank would be paid within one week.

The bank currently has about 116 branches across the country.