Real Reasons CBN Revoked Licences Of Two Banks; What Nigerians Should Know

The Central Bank of Nigeria (CBN) has announced the revocation of the operational licences for Aso Savings and Loans Plc and Union Homes Savings and Loans Plc.

This decision is based on persistent regulatory breaches and significant financial weaknesses observed in both institutions.

In a statement released on Tuesday by Mrs. Hakama Sidi Ali, the Acting Director of the Corporate Communications Department, the CBN indicated that this action was taken under its authority as outlined in Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020, along with Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria.

The CBN emphasized that this decision is part of a broader effort to strengthen the mortgage sector and ensure strict adherence to applicable laws and prudential standards.

The regulator highlighted that both Aso Savings and Loans Plc and Union Homes Savings and Loans Plc failed to meet critical operational and financial requirements, including the inability to fulfill the minimum paid-up share capital mandated for their respective licence categories and insufficient asset levels to cover their existing liabilities.

“The affected institutions had violated various Sections of BOFIA 2020 and the Revised Guidelines for Mortgage Banks in Nigeria, including:

(a) Failure to meet the minimum paid-up share capital requirement for the category of the bank licence granted to them by the CBN.

“(b) Having insufficient assets to meet their liabilities;

“(c) Being critically undercapitalised with a capital adequacy ratio below the prudential minimum ratio as prescribed by the CBN; and

“(d) Failure to comply with several directives and obligations imposed upon them by the CBN.”

The CBN further noted that the affected mortgage banks were critically undercapitalised, with capital adequacy ratios falling below the minimum threshold set by the regulator. In addition, the institutions were found to have repeatedly ignored regulatory directives and obligations issued by the apex bank.

The apex bank reaffirmed its commitment to safeguarding the stability of Nigeria’s financial system, stressing that it would continue to take decisive action against institutions that undermine public confidence or pose risks to the sector.