Top 10 Nigerian Banks That Failed: The Truth Behind Their Collapse
Nigeria's banking sector has experienced dramatic rises and painful falls throughout its history. From the distress era of the 1990s to the sweeping consolidation reforms of 2004–2005 and the post-global financial crisis clean-up of 2009–2011, several once-dominant financial institutions have vanished from the landscape. While today's heavyweights such as Zenith Bank, Guaranty Trust Bank, and Access Bank dominate headlines, history reveals a story of banks undone by weak corporate governance, insider abuse, undercapitalisation, and regulatory sanctions by the Central Bank of Nigeria (CBN).
Below is a detailed list of 10 notable Nigerian banks that failed, along with the reasons behind their collapse.
1. Savannah Bank
Established in 1990, Savannah Bank grew rapidly to over 140 branches nationwide. However, in 2002, the CBN revoked its license over insolvency and failure to meet prudential requirements, as stated in a CBN press release from that year. Although the Supreme Court ordered the restoration of its license in 2009, the bank never resumed full operations and eventually faded from the industry.
Why it failed: Capital inadequacy, regulatory non-compliance, and prolonged legal battles that weakened operations.
2. Societe Generale Bank of Nigeria (SGBN)
Founded in 1987 and linked to the Saraki family, SGBN could not meet the ₦25 billion minimum capital requirement introduced during the 2004–2005 banking consolidation exercise under then-CBN Governor Charles Soludo. Its license was revoked in 2006, according to a CBN Banking Supervision Report. In 2012, its assets were restructured, and it re-emerged as Heritage Bank, which later collapsed itself.
Why it failed: Inability to recapitalise during the consolidation reforms.
3. Oceanic Bank
Oceanic Bank was among Nigeria's largest lenders before the 2009 banking crisis. A joint CBN/NDIC audit found massive non-performing loans and insider abuses. Its CEO, Cecilia Ibru, was convicted of fraud in 2010 by the Federal High Court, based on EFCC prosecution records. In 2011, Oceanic Bank was acquired by Ecobank Nigeria.
Why it failed: Insider lending, poor risk management, and toxic assets exposed by regulatory stress tests.
4. Bank PHB
Formed after the 2005 consolidation of Platinum Bank and Habib Bank, Bank PHB expanded aggressively. However, following the 2009 CBN intervention in eight distressed banks, it failed to recapitalise by the September 2011 deadline. The CBN revoked its license and transferred assets and liabilities to Keystone Bank, as per a CBN press statement from August 2011.
Why it failed: Capital erosion and inability to attract new investors.
5. Spring Bank
Created from the merger of six banks during the 2005 consolidation, Spring Bank struggled with integration challenges and liquidity problems. By 2011, it was declared insolvent. The CBN replaced it with Enterprise Bank, which was later acquired by Heritage Bank, according to a CBN/NDIC 2011 resolution report.
Why it failed: Poor post-merger integration and persistent liquidity crisis.
6. Afribank Nigeria
Founded in 1959, Afribank was one of Nigeria's oldest banks. After the 2009 stress tests, it required capital injection from the Asset Management Corporation of Nigeria (AMCON). In 2011, its license was revoked and replaced with Mainstreet Bank, which was later acquired by Skye Bank.
Why it failed: High non-performing loans and capital deficiency.
7. Allstates Trust Bank
Allstates Trust Bank could not meet the ₦25 billion capital threshold set during the 2005 consolidation reforms. It failed to secure a merger partner and subsequently lost its license.
Why it failed: Failure to recapitalise or merge during sector reforms.
8. Skye Bank
Formed in 2005 from the merger of five banks, Skye Bank later acquired Mainstreet Bank in 2014. However, by 2016, severe liquidity issues and governance concerns led the CBN to dissolve its board. In September 2018, the CBN revoked its license and established Polaris Bank as a bridge bank, as announced in a CBN press release.
Why it failed: Governance lapses, weak capital buffers, and liquidity crisis.
9. Heritage Bank
After acquiring Enterprise Bank in 2014, Heritage Bank operated for nearly a decade before facing mounting financial strain. In June 2024, the CBN revoked its banking license, citing breach of capital adequacy requirements and failure to improve financial performance, according to a CBN press statement.
Why it failed: Persistent capital shortfalls and regulatory breaches.
10. African International Bank
African International Bank (AIB), established in 1987, operated as a merchant bank. Regulatory restructuring in the early 2000s and capital challenges led to the revocation of its license during banking reforms.
Why it failed: Merchant banking restructuring and capital inadequacy.
Conclusion
The collapse of these banks reflects critical lessons in corporate governance, regulatory oversight, and capital discipline. The sweeping reforms led by the CBN, particularly the 2005 consolidation and the 2009–2011 post-crisis interventions, reshaped Nigeria's financial system into a more resilient structure. While failures were costly, they ultimately strengthened supervision, improved capitalisation standards, and restored depositor confidence in the Nigerian banking sector.
