CBN Defies Court Ruling, Insists Union Bank's Status Remains Unchanged
The Central Bank of Nigeria (CBN) has declared that the status of Union Bank of Nigeria Plc remains "unchanged" despite a Federal High Court in Lagos invalidating its takeover of the financial institution. In a swift response to the court's decision, the apex bank stated it would review the certified true copy of the judgment for appropriate action while continuing to provide necessary regulatory oversight to ensure the bank operates in a sound, stable, and safe manner.
Court Ruling Deems CBN Intervention Unlawful
Justice Chukwujekwu Aneke, presiding over suit No: FHC/L/MISC/1377/2025, ruled that the CBN acted beyond its statutory powers when it dissolved Union Bank's board and management in January 2024. The court also halted the ongoing recapitalisation and investor selection processes initiated under the interim leadership. Justice Aneke held that the CBN's intervention breached the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and was therefore unlawful.
Legal Challenge by Beneficial Owners
The suit was instituted by Titan Trust Bank Limited, Luxis International DMCC, and Magna International DMCC, entities identifying themselves as the ultimate beneficial owners of Union Bank. They challenged:
- The dissolution of the board
- The appointment of a new management team
- The recapitalisation process that followed
The applicants alleged that the exercise diluted their shareholding and excluded them from key corporate decisions, prompting the legal action.
Court Orders and Dismissals
In the judgment, the court nullified the entire regulatory intervention, setting aside the public announcement dissolving the board and invalidating all actions taken by the CBN-appointed management. Justice Aneke ordered the immediate reinstatement of the former board and management led by Mr Farouk Mohammed Gumel. Additionally, the court issued an order restraining the CBN and other respondents from exercising any powers over the bank's governance, including:
- Restructuring its share capital
- Altering its ownership structure
Justice Aneke also dismissed procedural objections raised by the respondents, describing the relied-upon court rules as merely directory and not detrimental to the suit. On the issue of damages, the court acknowledged the respondents' admission that the applicants invested $190 million in the bank but declined to award additional compensation in the absence of oral evidence.
CBN's Stance and Future Actions
Despite the court's comprehensive ruling, the CBN has maintained its position, emphasizing that Union Bank's operational status remains unaffected. The regulator's statement underscores its commitment to ongoing oversight while it prepares to review the judgment details. This development highlights a significant clash between judicial authority and regulatory actions in Nigeria's banking sector, with potential implications for financial stability and investor confidence.
