We have watched with growing concern as instances of noncompliance and undercapitalisation continue to threaten the stability of Nigeria’s mortgage banking sector. The recent liquidation of Aso Savings and Loans and Union Homes Savings and Loans Plc, initiated by the Nigeria Deposit Insurance Corporation (NDIC) following the revocation of their licenses by the Central Bank of Nigeria (CBN), marks a critical moment for financial accountability and investor confidence in our housing finance industry.
The CBN’s decision was not taken lightly. Regulatory reviews revealed that both institutions consistently failed to meet prudential and operational benchmarks outlined in the Banks and Other Financial Institutions Act (BOFIA) 2020 and the Revised Guidelines for Mortgage Banks in Nigeria. These mortgage banks were critically undercapitalised, with inadequate asset bases to cover liabilities and capital adequacy ratios falling below statutory requirements. Repeated failure to comply with supervisory directives only exacerbated the risk to depositors, the wider financial system, and the integrity of the mortgage banking sector.
We welcome the decisive stance of the CBN and NDIC. It sends a strong message that adherence to capital, governance, and operational standards is non-negotiable. For too long, gaps in enforcement and weak regulatory compliance have allowed underperforming institutions to jeopardise savings, distort the housing finance market, and erode public confidence. By acting firmly, the apex bank demonstrates that the financial system will not tolerate recklessness or persistent regulatory breaches.
NDIC’s role in verifying depositors and facilitating payment of insured funds is equally critical. Depositors with balances up to N2,000,000 will automatically receive compensation, while those with larger balances will be paid in stages as assets are realised. The clear framework for verification, whether online or through physical verification at bank branches, shows a commitment to protecting depositors and mitigating panic. We note that the Corporation has provided practical guidance on documentation and payment procedures, which should reassure depositors that their claims will be handled transparently and efficiently.
Yet, while we commend these interventions, this moment should serve as a broader lesson for the mortgage banking sector. Compliance is not optional, and weak governance carries real consequences. Mortgage banks must prioritise robust capitalisation, rigorous risk management, and strict adherence to regulatory directives. Shareholders, management, and staff all have a role to play in ensuring that institutions operate with integrity and prudence. The fact that shareholders are the last to receive dividends in liquidation underlines that accountability begins at the top and cannot be deferred.
We also see an opportunity to strengthen public confidence in Nigeria’s housing finance system. The liquidation of these banks, coupled with prompt compensation of insured depositors, can reinforce the principle that our regulatory institutions act decisively to protect savings and maintain sector stability. Citizens and investors must be confident that deposits are safe, that mortgage banks are supervised effectively, and that violations carry consequences. Without this confidence, the growth of mortgage lending, housing development, and long-term financial planning will remain constrained.
Furthermore, the government and regulatory agencies must maintain consistent enforcement across the sector. Liquidating noncompliant institutions is one step, but proactive monitoring, early intervention, and capacity-building support for well-meaning banks are equally important. Sustainable mortgage banking requires a culture of compliance, transparency, and prudence embedded across institutions, not merely reactive measures when failures occur.
We must also recognise that the responsibility for a stable mortgage sector is shared. Depositors, investors, and banks themselves all have roles to play. NDIC’s accessible verification platforms and clear instructions empower depositors to safeguard their funds. Banks must maintain accurate records and comply with reporting standards. Regulators must enforce rules without fear or favour.
