As part of measures to ensure effective financial system, the Central Bank of Nigeria (CBN) has revoked the operating licences of Aso Savings and Loans and Union Homes Savings and Loans, for contravening regulations guiding their operations in the country.
CBN stated that the move was part of renewed efforts to sanitise the mortgage sub-sector and enforce strict compliance with banking laws and regulatory standards.
According to the Apex bank, decision to withdrawal their licenses was taken in exercise of the powers conferred on it under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020 and Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria.
In a statement released on Tuesday by the CBN which was made available to newsmen by its the Acting Director of the Corporate Communications Department, Hakama Ali, the apex financial body said the decision followed persistent regulatory breaches by the affected institutions, which undermined their safety, soundness and ability to meet obligations to depositors and other stakeholders.
According to the CBN, the two mortgage banks failed to meet the minimum paid-up share capital requirement applicable to the category of licence granted to them. The regulator also found that both institutions had insufficient assets to cover their liabilities, raising serious concerns about their solvency position.
The bank further disclosed that both financial institution were critically undercapitalised, with capital adequacy ratios falling below the prudential minimum prescribed by the CBN. In addition, they failed to comply with several regulatory directives and obligations issued by the apex bank over time.
“The affected institutions violated various provisions of BOFIA 2020 and the Revised Guidelines for Mortgage Banks in Nigeria.
“These include failure to meet the minimum paid-up share capital requirement, having insufficient assets to meet liabilities, being critically undercapitalised with capital adequacy ratios below the prescribed prudential minimum, and non-compliance with several regulatory directives.”
The CBN noted that the revocation of the licences was part of a broader effort to reposition the mortgage banking segment of the financial system, strengthen confidence in the sector and ensure that only institutions with the capacity to operate in a safe and sound manner are allowed to do so.
It noted that enforcing regulatory standards across all segments of the financial system in line with its statutory mandate would be sustained.
“The Central Bank of Nigeria remains committed to its core mandate of ensuring financial system stability,” the apex bank stated.
