NDIC begins wind-up of 89 failed microfinance, mortgage banks

Washington D.C|| The Nigeria Deposit Insurance Corporation (NDIC) has begun the formal process of winding up 89 failed microfinance and primary mortgage banks, as it moves to conclude one of the country’s largest post-failure banking resolutions in recent years.

The deposit insurer said Wednesday it has commenced steps to finalise liquidation activities for the closed institutions after their assets and liabilities were transferred to new investors under a Purchase and Assumption framework.

The banks were part of a wider group of 179 microfinance banks and four primary mortgage banks whose operating licenses were revoked by the Central Bank of Nigeria (CBN) in May 2023.

The resolution strategy allowed eligible investors to acquire distressed assets and assume liabilities, with the aim of preserving value, maintaining financial stability and limiting disruption to depositors.

Under the structure, 89 new institutions were subsequently licensed by the central bank to take over the operations of the failed banks and have since resumed business under new names.

The NDIC said the current phase of the process is focused on formally concluding the legal liquidation of the defunct entities. This includes approaching various divisions of the federal high court to obtain dissolution orders and secure formal discharge of the corporation as liquidator.

In practical terms, the court approvals are expected to mark the final administrative step in closing the books on the failed institutions, following completion of asset transfers and operational takeovers by successor banks.

“The NDIC, in its capacity as liquidator of the defunct banks, will be presenting applications to various judicial divisions of the Federal High Court to obtain orders of dissolution,” Hawwau Gambo,
the corporation said in a statement signed by its head of communication and public affairs.

The winding-up process underscores the regulator’s continued reliance on the Purchase and Assumption model as a tool for managing distressed financial institutions, particularly in segments of the banking system that serve lower-income and underbanked populations.

Nigeria has in recent years stepped up efforts to strengthen financial sector resilience amid rising vulnerabilities, particularly among smaller lenders, many of which face weak capital buffers, governance challenges, and limited risk management capacity.

By transferring viable assets to new operators rather than proceeding solely through traditional liquidation, authorities aim to preserve depositor confidence and reduce the social and economic fallout typically associated with bank failures.