In a decisive move to enforce regulatory standards and stabilize Nigeria’s financial sector, the Central Bank of Nigeria (CBN) has revoked the operating licences of two prominent mortgage institutions: Aso Savings and Loans Plc and Union Homes Savings and Loans Plc. This action, announced on December 16, 2025, signals a significant shift in the regulator’s approach to non-compliance within the mortgage sub-sector.
The announcement was made by Hakama Sidi-Al, the CBN’s Acting Director of Corporate Communications. She framed the revocation as a critical component of the apex bank’s broader strategy to “re-position the mortgage sub-sector and promote a culture of compliance with relevant laws and regulations.” This is not merely a punitive measure but a foundational step toward building a more resilient and trustworthy housing finance system for Nigeria.
Understanding the Legal and Regulatory Basis
The CBN acted under the authority of two key legal instruments:
- Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020: This act empowers the CBN to revoke a bank’s licence for reasons including insolvency, violation of laws, or conducting business in a manner detrimental to depositors or creditors.
- Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria: These guidelines set specific operational, governance, and capital requirements for mortgage banks.
The invocation of these specific statutes underscores that the action was not taken lightly but followed a formal process of identifying and documenting breaches.
Decoding the Specific Violations
The CBN’s statement cited a cascade of failures by the two institutions, which collectively paint a picture of severe financial distress and regulatory disregard:
- Capital Deficiency: The core failure was the inability to meet the minimum paid-up share capital requirement for their licence category. Mortgage banks are tiered based on their capital base, which determines the scale of transactions they can undertake. Operating below this threshold is a fundamental breach that compromises their ability to absorb losses.
- Insolvency Risk: The CBN stated the institutions had “insufficient assets to meet their liabilities.” This is a classic definition of insolvency, meaning their financial holes were so deep that depositors’ and creditors’ funds were at imminent risk.
- Critical Undercapitalization: Their Capital Adequacy Ratio (CAR) fell below the prudential minimum. CAR measures a bank’s financial strength by comparing its capital to its risk-weighted assets. A low CAR indicates excessive risk-taking without a sufficient buffer, a major red flag for regulators.
- Non-Compliance with Directives: Beyond financial metrics, the institutions failed to comply with several specific CBN directives and obligations. This suggests a pattern of managerial defiance or operational incompetence, leaving the regulator with no recourse but licence revocation.
Broader Context and Implications for the Market
This action must be viewed within the CBN’s renewed focus on financial system stability, its core mandate. By removing critically undercapitalized and non-compliant entities, the CBN aims to:
- Protect Depositors: Prevent a potential crisis of confidence that could lead to bank runs.
- Purge the System: Encourage consolidation and force weaker players to either recapitalize or exit, strengthening the overall sector.
- Send a Strong Signal: Demonstrate to all financial institutions that regulatory requirements are not optional. This is crucial for attracting both local and international investment into Nigeria’s housing finance market.
For customers of Aso Savings and Union Homes, the immediate concern is the safety of their deposits. Typically, following such a revocation, the Nigeria Deposit Insurance Corporation (NDIC) would be expected to step in to manage the liquidation process and pay insured depositors up to the guaranteed limit.
The revocation of these licences represents a pivotal moment for Nigeria’s mortgage industry. It is a clear indication that the CBN is moving beyond warnings to enforceable action. For the sector to grow and effectively address Nigeria’s massive housing deficit, it must be built on a foundation of strong, compliant, and well-capitalized institutions. This action, while severe, is a necessary step in that cleansing and rebuilding process. The stability of the broader financial system depends on the integrity of its individual components.
Reported by Kadiri Abdulrahman for the News Agency of Nigeria (NAN). Edited by Benson Ezugwu and Joseph Edeh.
