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First Bank recovers N456 Billion loan from Heritage Bank before license revocation

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First Bank recovers N456 Billion loan from Heritage Bank before license revocation

According to reports, First Bank has received the full repayment of a “N456 billion loan” extended to Heritage Bank.

This recovery is part of a “bailout loan” arranged during the tenure of former Central Bank of Nigeria (CBN) Governor Godwin Emefiele.

According to top sources from First Bank, the CBN credited the tier-one bank prior to its decision to revoke Heritage Bank’s license, thus averting what could have been a significant impairment charge for First Bank.

On Monday, the CBN announced the revocation of Heritage Bank’s license, stating that “the bank has continued to suffer and has no reasonable prospects of recovery,” which led to the bank’s eventual collapse.

Details of the Payment

Verified information from newsmen indicates that the actual amount received by First Bank was N456 billion, concluding a seven-year wait since First Bank supported Heritage Bank in clearing.

First Bank’s financial statements reveal that the bank held balances with other banks amounting to N688 billion as of the first quarter ending March 2024, down from N735 billion in December 2023.

According to First Bank, these balances include clearing balances with other deposit money banks. First Bank provides clearing services for some banks in Nigeria, and the current balances within Nigeria include clearing exposures to banks as of December 31, 2023.

Push for Recovery: Efforts to recover the N456 billion loan intensified as Heritage Bank’s situation worsened over the years. However, a resolution was not reached until a new board and management took over the holding company of the bank earlier this year.

The amount was eventually credited to First Bank ahead of the official announcement of Heritage Bank’s license revocation, ending the seven-year wait.

This payment is expected to be reflected in FBN Holdings’ half-year financial statements, bolstering its cash positions and preventing the bank from incurring a write-off for the loans.

FBN Holdings reported a pre-tax profit of N358.8 billion in the first quarter of 2024, alongside an impairment provision of N227.4 billion.

Heritage Bank’s troubles began in 2019 when it faced severe distress and appeared on the verge of collapse. However, under Godwin Emefiele, the CBN pursued a policy of not allowing banks to fail, supporting Heritage Bank through various measures.

First Bank was given the green light by the CBN to backstop Heritage Bank’s clearing obligations.

Clearing in Nigerian banks refers to the process of settling financial transactions between banks, ensuring the correct transfer of funds from one account to another.

This process is vital for maintaining the banking system’s integrity and efficiency, involving several steps and mechanisms to facilitate the smooth exchange of financial instruments such as checks and electronic funds transfers.

Banks excluded from the clearing process are technically insolvent, indicating distress and preventing further exposure by other banks.

However, under Emefiele’s policy, the CBN supported Heritage Bank through First Bank, issuing a “Letter of Comfort” to the tier-one bank. This guarantee ensured that First Bank did not have to make significant provisions for the loan.

Auditors had often requested a provision for the loan, but this request was repeatedly dropped due to the CBN’s letter guaranteeing loan repayment.

This successful loan recovery is a significant financial maneuver for First Bank, reflecting strategic financial management and timely intervention by regulatory authorities to maintain stability within Nigeria’s banking sector.

According to information contained in the 2021 audited financial statement of the bank at a negative reserve of N230.8 billion as of December 2021. The bank had a share capital of just N53.9 billion and accumulated losses of N459.3 billion making it technically insolvent.

As of 2021, Heritage Bank reported it had a balance of N247 billon as balances due to banks in Nigeria. The bank also cited First Bank as the only bank owed the amount at the time. It is likely that the N456 billion paid to First Bank includes accumulated interests.

Heritage Bank is yet to make public its 2022 and 2023 financial statements.

Business

Seven mistakes to avoid when starting online business

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Starting your own online business can be exhilarating, offering endless possibilities for growth and success. However, this path is also filled with challenges and obstacles.

Studies have also shown that 90% of online businesses fail within the first four months of operation. So it is important to navigate this entrepreneurial journey with caution and foresight.

Without further ado, here are common pitfalls to avoid while launching an online business.

  • Not having a clear business plan

Most people might think a business plan is not needed because it is an online business. That is not true. You need a plan for every type of business.

Not just a business plan but a clear and realistic one. Having a clear business plan gives you something to work with as a guide. It tells you what to do, why you’re doing it, how to do it, and when to do what you have to do.

With a business plan in place, it becomes easier and you will not get lost in setting up the business.

However, make the plan flexible and subject to changes just as you adjust your strategies as a newbie. Over time it’ll become well defined.

  • Neglecting market research

One of the most crucial steps in starting an online business is conducting thorough market research.

There are a lot of businesses in the social media space already so if you are not clear about your goals and target audience you might get lost.

So do thorough research to fully understand your target audience, competition, and market trends.

  • Neglecting financial needs

Online business owners might neglect financial plans because they do not need to pay for physical stores.

However, neglecting financial planning can make your business fail faster than expected. So be sure to prepare financial projections for your business, at least for the first 12 months.

You should also identify your business’ major funding sources and ensure there is an alternate source as well.

  • Not seeking help when needed

The earlier you accept you can not do all that is needed to start your business alone, the better.

You are a new entrepreneur so you may lack the expertise in certain areas critical to running a successful online business, such as marketing, finance, or technology. So why not seek help from experts or your older colleagues?

Failing to seek help from experts or mentors with the knowledge and experience can hinder your ability to make informed decisions and overcome challenges effectively.

Remember to network. Talk to people already in the business, attend workshops, and be open to partnerships.

Also, be open to learning. Learn from your initial missteps, and learn from experts and fellow entrepreneurs.

  • Ignoring the importance of Search Engine Optimization (SEO)

Search Engine Optimization (SEO) plays a vital role in driving organic traffic to your page and improving your visibility in search engine results.

Many online entrepreneurs just post their products and fail to implement effective strategies to optimize the content.

However, making use of the best SEO practices will improve your visibility in search engine results, online visibility, and potential customer reach.

  • Believing more followers is more sales

When starting your online business, focus on more sales than followers.

Many online business owners focus heavily on getting new followers thinking when they have a large audience, sales will come.

However, having more followers does not mean you get more customers, especially when you do not have any market strategy to attract potential customers.

Instead of spending your time, energy, and money on getting followers, focus on nurturing relationships, boosting engagement with the right audience, and making them want to buy what you sell.

  • Poor customer service

Remember you are an online business owner so you need to make people trust you.

So, provide exceptional customer service that will enhance loyalty. One of the excuses most small business entrepreneurs give is that they are still small so they don’t need any serious customer service. Believing customer service is for bigger businesses.

However, this is a costly online business mistake you should avoid. So, enhance to provide good and seamless customer service if you want your business to be successful.

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Business

NDPC fines four banks, three companies N400m for data violation

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Nigeria Data Protection Commission (NDPC) says four banks and three other companies have faced sanctions and incurred fines totalling N400 million for infractions related to breaches of citizens’ data.

Vincent Olatunji, national commissioner of NDPC, made this known on Tuesday while reporting on the one-year implementation of the NDPC Act.

On June 14, 2023, President Bola Tinubu signed the Nigeria data protection bill into law.

In the legislation, the establishment of NDPC to replace the NDPB was introduced.

The commission is expected to protect citizens’ private information and be independent.

According to Olatunji, over the past year, more than 1000 financial institutions, schools, insurance companies, and consultancy firms have undergone investigations for breaches of citizens’ data.

He also said there are ongoing investigations concerning data infractions.

Olatunji also highlighted that the activities of the NDPC have led to increased levels of compliance with the Nigeria Data Protection Act in both the private and public sectors.

“When we started, the levels of compliance within the private sector was about 49 percent while the public sector was 4 percent. But today, private sector compliance is above 55, while the public sector has reached 15 percent,” Olatunji said.

“The nation’s data ecosystem is now worth over N10 billion and the commission considers it imperative to ensure that citizens’ data are safe, secure and protected in line with global best standards and practices.”

He further said Nigeria is now at the forefront of the activities of the global data assembly due to the Data Protection Act 2023 and the impact of the data ecosystem on the national economy as nations like Kenya, Ghana, China, Singapore, and Malaysia, among others now share experiences with Nigeria.

“The Data Protection Act 2023 is a major milestone for Nigeria. Mr President laid our apprehension to rest when he signed the Act on June 12, 2023,” he said.

“It was a major turnaround for the industry. Now the data ecosystem is beyond everybody because it is a global phenomenon due to the impact of technology.

“In terms of jobs and wealth creation, promotion of tourism, perception and attraction of foreign direct investments into Nigeria, we have taken a leapfrog and even overtaken some countries.

“And that’s why Nigeria was given the hosting right for 2024 All African Data Protection Commission’s and Institutions. About 30 countries will be here next year for the event.”

NDPC TO COLLABORATE WITH REGULATORS TO ENSURE COMPLIANCE WITH ACT

Olatunji said the NDPC now collaborates with the Central Bank of Nigeria (CBN), the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), and other regulatory organisations to make sure stakeholders under their supervision abide by the Data Protection Act.

According to Olatunji, capacity building, awareness raising, and stakeholder engagement have raised the bar for compliance within the ecosystem.

He also said to check the activities of digital loan platforms, the commission collaborated with CBN, the Independent Corrupt Practices and Other Related Offences Commission (ICPC), the Economic and Financial Crimes Commission (EFCC) and other regulatory authorities.

The national commissioner, however, said awareness would continue to be created for vulnerable Nigerians who become victims of the loan sharks due to ignorance.

Olatunji also said the country’s population and landmass are a challenge to a total clampdown on the digital loan sharks as most of them operate from isolated or remote areas without known addresses.

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FG to give transport unions 50% subsidy on CNG vehicle conversion kits

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The federal government says it will subsidise compressed natural gas (CNG) vehicle conversion kits for members of transport unions.

Micheal Oluwagbemi, programme director and chief executive officer of the Presidential Initiative on CNG, said the government has procured over 20,000 conversion kits that will soon be deployed.

He said the conversion incentive programme will start with members of the National Union of Road Transport Workers (NURTW), Road Transport Employer Association of Nigeria (RTEAN) and Nigerian Association of Road Transport Owners (NARTO).

“We are launching what we called the Conversion Incentive Programme with members of the NURTW, RTEAN, and NARTO being our immediate focus,” he said.

“This is because they are the operators in the road transport sector providing 90 per cent of the transportation in the country to members of the public.

Oluwagbemi said the conversion kits will be available to the transport unions at a 50 percent discount, adding that installation cost is free.

“We are already negotiating with our partners who will initiate that project in the next week,” he said.

“We have already identified eight conversion centres in four states, namely Kwara, Lagos FCT, and Rivers that will pilot the programme.”

On his part, Uba Sani, governor of Kaduna, commended the federal government’s initiative to help the union workers switch from petrol-powered vehicles to CNG-powered vehicles.

Sani, who was represented by Ibrahim Hamza, commissioner for works, said transportation is one of the major promoters of socio-economic activities in the state.

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Bodex F. Hungbo, SPMIIM is a multiple award-winning Nigerian Digital Media Practitioner, Digital Strategist, PR consultant, Brand and Event Expert, Tv Presenter, Tier-A Blogger/Influencer, and a top cobbler in Nigeria.

She has widespread experiences across different professions and skills, which includes experiences in; Marketing, Media, Broadcasting, Brand and Event Management, Administration and Management with prior stints at MTN, NAPIMS-NNPC, GLOBAL FLEET OIL AND GAS, LTV, Silverbird and a host of others

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