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Worried depositors rush to pull billions of Naira out of Heritage bank

By per second news

Anxious customers jammed the phone lines and website of Heritage Bank Plc and crowded most of its branch offices to pull out their savings because of concerns about fresh financial problems of the bank.

Though, the Central Bank of Nigeria, CBN, sought two weeks ago to assure depositors and the financial industry that the bank was fiscally stable. And federal regulators said they weren't alarmed by the volume of withdrawals from the bank. Panicky customers and depositors are increasingly withdrawing their funds from the bank.

Per Second News investigation reveals that in the midst of the dramatic showdown between the bank and its declining customers, credible reports indicate that the bank is unable to meet customers’ immediate withdrawal requests and has wiped out all foreign currency domiciliary accounts through physical theft of cash by the bank's directors.

Many depositors—worried by the prospect of a default or, worse, sudden closure —have been pulling money out of the bank in record amounts over the last few days.

According to findings, billions of Naira flowed out of Heritage bank within the last week, sparking fears that measures will be taken to stem the outflow, despite a brief reprieve due to CBN intervention to save the bank. On Tuesday, by mid-afternoon, deposits had shrunk by close to N10 billion Naira.

"I'm embarrassed to admit it, but my husband and I took all our money out of the Heritage bank and put it in another bank on Monday," said one young mother of two boys, who didn't want to give her name in Lagos on Monday.

The apex CBN bank, in the press statement issued by its Acting Director of Corporate Communications, Mr Isaac Okorafor, assured all depositors of the safety of their deposits.

But depositors in line outside the Heritage Bank lacked confidence in the system and repeatedly mentioned the issues of past distressed bank’s debacle. “I have my savings in there, and people are like sheep — I want to be on the safe side,” said Ibrahim Abubakar, a retired civil servant, speaking to this media house outside one of Heritage bank’s branch in Lagos.

Mounting fears that the country's banking industry may be on the brink of collapse was the main reason for CBN’s intervention, industry experts said.

"People do not trust the government anymore despite its assurances," said Adebayo B, a former depositor at the bank who claimed he withdrew all his money from the bank weeks ago.

Heritage bank has repeatedly said those concerns aren’t justified.

Banking analysts say that liquidity — the availability of ample, easy-to-sell securities and other funding to satisfy client obligations — is now troubling.

Per Second News gathered that the lack of a convincingly profitable strategy and waning customer confidence in the bank are big problems, analysts and investors say.

Heritage Bank’s situation has also been complicated by thorny politics.

A detailed analysis last Friday by Per Second News shows that corporate profile is more worrisome than might have been anticipated as boardroom war, impropriety, intrigues, and nepotism are part of a larger disease that has infected the bank.

The presence of new uncertainties has eroded broader confidence in the Bank as comprehensively revealed in a developing story by Per Second News due for publication next week.