CBN Revokes Operating Licences of Aso Savings & Loans Plc and Union Homes Savings & Loans Plc

The Central Bank of Nigeria (CBN) has revoked the operating licences of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc, citing persistent regulatory infractions and prolonged deterioration in the financial condition of both primary mortgage banks.

The action was taken in line with 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, underscoring the apex bank’s commitment to safeguarding financial system stability and depositor interests.

Key Grounds for Licence Revocation

According to the CBN, the decision followed extensive supervisory reviews which revealed that both institutions:

• Failed to meet minimum paid-up share capital requirements applicable to their licence category.
• Had assets insufficient to cover liabilities, exposing depositors and other stakeholders to elevated financial risk.
• Were critically undercapitalised, with capital adequacy ratios falling below the prudential minimum set by the regulator.
• Repeatedly breached regulatory directives and failed to comply with statutory and supervisory obligations over an extended period.

These shortcomings, the CBN noted, rendered the institutions unfit to continue operating within Nigeria’s regulated financial system.

Immediate Implications of the Revocation

Following the revocation:

• Aso Savings and Loans Plc and Union Homes Savings and Loans Plc are no longer authorised to conduct any banking or mortgage-related activities in Nigeria.
• The institutions are barred from accepting deposits, granting loans, or offering regulated financial services.
• Depositors, creditors, and other stakeholders are to await further directives from the CBN and the Nigeria Deposit Insurance Corporation (NDIC) regarding the resolution process.
• The NDIC is expected to determine next steps, which may include liquidation and the treatment of customer deposits in line with applicable laws.

Background and Context

Both mortgage banks have faced prolonged operational and regulatory challenges in recent years:

Aso Savings and Loans Plc

• Experienced liquidity constraints and regulatory intervention in prior years.
• Underwent CBN-supervised remedial restructuring as far back as 2017.
• Efforts to raise fresh capital or attract strategic investors were hindered by legacy liabilities.
• Shares on the NGX have remained thinly traded, with ongoing concerns around compliance and shareholder value.

Union Homes Savings and Loans Plc

• Was among 14 companies delisted by the NGX in 2024.
• Failed to submit audited financial statements for over six years, breaching listing requirements.
• Suffered sustained governance and disclosure lapses prior to licence revocation.

Analyst Commentary

“The licence revocation of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc highlights the CBN’s tightening supervisory posture, particularly within the mortgage banking sub-sector. Persistent undercapitalisation, weak governance, and failure to comply with regulatory standards leave little room for regulatory forbearance. This action reinforces market discipline and sends a strong signal to other institutions on the importance of capital adequacy and compliance.”

Conclusion

The withdrawal of licences from Aso Savings and Loans Plc and Union Homes Savings and Loans Plc marks a decisive regulatory intervention aimed at protecting depositors and preserving financial system stability. While the resolution process now shifts to the CBN and NDIC, the action underscores the increasing enforcement of prudential standards in Nigeria’s financial sector and the consequences of prolonged regulatory non-compliance.