The Central Bank of Nigeria (CBN) has shut down two mortgage lenders, citing chronic regulatory violations and severe financial distress that posed risks to depositors and the broader financial system.
In a statement released on Tuesday, the apex bank announced the revocation of operating licenses for Aso Savings and Loans Plc and Union Homes Savings and Loans Plc, effectively ending their ability to conduct banking operations in Africa’s largest economy.
The closures mark the latest regulatory enforcement action by the CBN as it intensifies efforts to shore up confidence in Nigeria’s financial sector amid mounting economic pressures.
According to Hakama Sidi Ali, Acting Director of Corporate Communications at the CBN, both institutions repeatedly failed to meet fundamental prudential requirements that govern mortgage banking operations in the country.
“The decision 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,” the statement said.
Chief among the violations was the failure to maintain the minimum paid-up share capital required for their license category—a baseline regulatory threshold designed to ensure institutions have sufficient financial cushion to absorb losses.
More alarmingly, the CBN’s examination revealed that both banks’ assets were insufficient to cover their liabilities, a red flag indicating potential insolvency and exposing customers to significant loss.
The regulator also found that the two lenders were “critically undercapitalized,” with capital adequacy ratios—a key measure of financial health—falling well below the prudential minimum set by the central bank.
Beyond capital deficiencies, both institutions were cited for persistent non-compliance with regulatory directives and other statutory obligations, suggesting a pattern of governance and operational failures.
With the license revocations now in effect, Aso Savings and Loans Plc and Union Homes Savings and Loans Plc are barred from accepting deposits, disbursing loans, or offering any regulated financial services.
The institutions are no longer authorized to operate as mortgage banks in Nigeria, and their banking halls are expected to cease all customer-facing activities.
Depositors—many of whom may have placed their savings with these institutions in pursuit of homeownership or long-term investment—now face uncertainty over the fate of their funds.
The CBN has directed affected customers and stakeholders to await further instructions from both the central bank and the Nigeria Deposit Insurance Corporation (NDIC), which is responsible for managing failed financial institutions and protecting depositors up to the insured limit.
The NDIC will determine the resolution process, which could include liquidation proceedings and the orderly winding down of the banks’ operations. How much depositors will recover, and how quickly, remains unclear.
Both institutions had been struggling operationally for years, with warning signs visible to regulators, investors, and market observers.
Aso Savings and Loans, which was listed on the Nigerian Exchange (NGX), had experienced prolonged liquidity challenges and compliance issues with exchange regulations. Trading in its shares had been thin, with investor confidence eroded by concerns over financial performance and governance.
As far back as 2017, the CBN reportedly intervened to supervise remedial restructuring efforts aimed at stabilizing the lender. However, attempts to raise fresh capital or attract strategic investors faltered, weighed down by legacy liabilities and an inability to turn operations around.
Union Homes Savings and Loans faced its own governance crisis. The company was among 14 firms delisted by the Nigerian Exchange in 2024 for failing to meet listing requirements. Notably, Union Homes had not submitted audited financial statements to the exchange for over six years—a glaring lapse that raised serious questions about transparency and accountability.
The delisting effectively cut off the company’s access to capital markets and further isolated it from potential investors.
In its statement, the central bank stressed that the license revocations were necessary to preserve the integrity of the financial system.
“The CBN remains committed to its core mandate of ensuring financial system stability,” the regulator said, signalling that it will continue to take decisive action against institutions that pose systemic risks.
The closures come at a time when Nigeria’s banking sector is under increased scrutiny. Inflationary pressures, currency volatility, and economic uncertainty have strained financial institutions, particularly smaller players like mortgage banks that lack the capital buffers of commercial lenders.
The CBN has, in recent years, ramped up enforcement, shutting down microfinance banks and other non-bank financial institutions found to be insolvent or operating in violation of regulatory standards.
Depositors with funds in Aso Savings and Union Homes will be looking to the NDIC for clarity on the recovery process. Under Nigerian law, the NDIC insures deposits up to a maximum of ₦500,000 per depositor per institution—meaning those with larger balances may face significant losses.
The liquidation process, if initiated, could take months or even years, depending on the complexity of the banks’ balance sheets and the extent of their liabilities.
For the broader mortgage banking sector, the shutdowns serve as a stark reminder of the importance of regulatory compliance and sound financial management—especially in a sector critical to Nigeria’s housing finance needs.
As the CBN continues its cleanup of the financial system, more institutions operating on the margins may face similar scrutiny in the months ahead.
WHAT YOU SHOULD KNOW
The Central Bank of Nigeria has shut down Aso Savings and Loans Plc and Union Homes Savings and Loans Plc due to critical undercapitalization and years of regulatory violations.
Both mortgage banks failed to meet minimum capital requirements and had liabilities exceeding their assets, putting depositors at risk. All banking operations have ceased immediately, and depositors must wait for the Nigeria Deposit Insurance Corporation to determine how much of their money—if any—can be recovered.
This action underscores the CBN’s zero-tolerance approach to financial institutions that threaten system stability and serves as a warning that weak banks operating below regulatory standards will be closed regardless of their history or market presence.
