The hammer wielded by the Central Bank of Nigeria that suddenly fell on Heritage Bank is, from my perspective, a forerunner to the coming chaos in the banking industry.
This is the neat arrangement the industry calls bridge banking, which its proponents expect to protect depositors' monies, protect jobs in the industry and generally avoid an unsettled situation that would reflect unfavourably on the entire banking industry. On the flip side, public funds from the treasury would, in the short run, be injected into the failing bank to stabilise it, hoping that it would be recouped when it is eventually sold.
I guess the condition of Heritage Bank had made it nearly impossible for the CBN to give it the treatment it allowed banks that had failed before despite the consequences of depositors losing their money and the workers of the bank facing the risk of being thrown into the job market. What worries many observers has been the inability of the CBN to take action on this bank that had shown clear signs of failure for quite some time. The present CBN board inherited the problem from the defunct Emefiele era.
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Nigeria: Central Bank Revokes Licence of Heritage BankThe CBN said it took the action to strengthen public confidence in Nigeria's banking system.
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