NDIC Commences Final Liquidation of 89 Defunct Banks Following CBN Licence Revocations
The Nigeria Deposit Insurance Corporation (NDIC) has initiated the concluding phase of liquidating 89 defunct Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs). This action follows the revocation of their operating licences by the Central Bank of Nigeria (CBN) in May 2023, marking a significant step in Nigeria's financial sector restructuring.
Background and Regulatory Framework
The affected institutions were part of a larger group of 179 microfinance banks and four mortgage banks that had their licences withdrawn by the CBN on May 22 and 23, 2023. In response, the CBN licensed 89 new institutions to assume control under the Purchase and Assumption (P&A) model, which involves taking over both assets and liabilities to ensure operational continuity and protect depositors.
According to the NDIC, this process aligns with its enabling Act and other Nigerian laws governing bank resolution. The corporation plans to approach various divisions of the Federal High Court to obtain orders for the formal dissolution of these defunct entities, thereby discharging the NDIC from its role as liquidator.
Transition to New Operators and Nationwide Impact
Under the P&A arrangement, the newly licensed institutions have seamlessly integrated the operations of the failed banks, covering multiple states including Lagos, Abuja, Kano, Kaduna, and Rivers. This nationwide transition reflects a broader effort to stabilize and restructure Nigeria's microfinance and mortgage sectors, enhancing financial stability and consumer confidence.
The NDIC has published a comprehensive list of the 89 affected banks and their new owners, detailing institutions across states such as Abia, Akwa Ibom, Anambra, Ogun, and the Federal Capital Territory. This transparency aims to inform stakeholders and the public about the ongoing changes in the banking landscape.
Related Regulatory Developments
In a parallel move, the CBN has directed all credit-offering banks to submit Board-approved Risk-Based Capital (RBC) stress test reports by April 30, 2026. Issued on March 6, 2026, this directive shifts focus from capital size to assessing resilience under adverse conditions, aiming to evaluate the true strength of banks' capital post-recapitalization. Analysts view this as a proactive measure to bolster the financial system's robustness.
The NDIC's liquidation efforts, combined with the CBN's stress testing, underscore a coordinated approach to strengthening Nigeria's banking sector, ensuring it remains resilient in the face of economic challenges.
