Nigeria’s central bank has revoked the operating licences of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc, citing persistent capital and solvency breaches, as it steps up efforts to tighten oversight of the mortgage banking sector.
The Central Bank of Nigeria (CBN) said in a statement issued on Tuesday that the decision was taken under powers conferred by 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.
The regulator said the two institutions failed to meet minimum capital and prudential requirements, raising concerns about their ability to operate safely and protect depositors.
Capital shortfalls and weak balance sheets
According to the CBN, both mortgage lenders were critically undercapitalised and had insufficient assets to cover their liabilities, pointing to a weak solvency position.
“The affected institutions violated various provisions of BOFIA 2020 and the Revised Guidelines for Mortgage Banks in Nigeria,” said Hakama Sidi Ali, acting director of the CBN’s corporate communications department.
“These include failure to meet the minimum paid-up share capital requirement, having insufficient assets to meet liabilities, being critically undercapitalised with capital adequacy ratios below the prescribed prudential minimum, and non-compliance with several regulatory directives.”.
Regulatory thresholds breached
Before the licence revocation, both institutions operated as Primary Mortgage Banks (PMBs) with national authorisation, which subjected them to higher capital and prudential requirements compared to regional lenders.
Under industry rules, national PMBs are required to maintain a minimum paid-up share capital of ₦5 billion, according to data from the National Pension Commission. In addition, the CBN’s revised PMB guidelines published in 2019 require mortgage banks to maintain a minimum capital adequacy ratio of 10% against risk-weighted assets.
The same rules stipulate that at least 50% of a mortgage bank’s total assets must be held in mortgage-related assets, a threshold the affected institutions were also found to have breached.
The CBN said the licence revocations form part of a broader effort to sanitise the mortgage banking sub-sector and ensure compliance with banking laws and regulatory standards.
According to the regulator, the move is aimed at strengthening confidence in the mortgage market and ensuring that only institutions with the financial capacity and governance structures to operate in a safe and sound manner are allowed to do so.
Sidi Ali said the central bank remains committed to enforcing regulatory standards across all segments of the financial system in line with its statutory mandate.
The CBN has, in recent years, repeatedly warned operators in the mortgage sub-sector to strengthen their capital positions, improve governance and comply fully with regulatory requirements.
