The Nigeria Deposit Insurance Corporation (NDIC) has begun the process of finalizing the liquidation of 89 defunct Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs) that have been acquired by new owners. This development follows the successful implementation of the Purchase and Assumption (P&A) resolution model, which allowed the Central Bank of Nigeria (CBN) to license 89 eligible institutions to take over the assets and liabilities of the failed banks. These institutions were part of a larger group, including 179 MFBs and four PMBs, whose operating licenses were revoked by the CBN on May 22 and 23, 2023.
Under the P&A arrangement, the newly licensed banks have commenced operations under different names. To formally conclude the liquidation process, the NDIC, acting as the liquidator, will file applications in various divisions of the Federal High Court. These applications will seek orders to dissolve the closed banks and discharge the NDIC from its role as liquidator. This action is in accordance with the provisions of the NDIC’s enabling Act and other relevant laws governing bank resolution in Nigeria.
The liquidation exercise aims to ensure the proper closure of defunct institutions while safeguarding the stability of the financial system. The NDIC has reiterated its commitment to protecting depositors and maintaining public confidence in the banking sector. The defunct banks were located across several states, including Lagos, Anambra, Oyo, Kaduna, Kano, and the Federal Capital Territory. This resolution process represents a significant step in Nigeria’s efforts to strengthen its financial sector and address challenges within the microfinance and mortgage banking subsectors.
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