- KEY POINTS
- The Central Bank of Nigeria (CBN) has filed a formal appeal against the March 25 Federal High Court judgment that nullified its January 2024 takeover of Union Bank of Nigeria Plc.
- Justice Chukwujekwu Aneke ruled that the apex bank acted ultra vires (beyond its powers) by dissolving the board and management, ordering the immediate reinstatement of the former directors.
- To challenge this, the CBN has assembled a high-powered legal team of Senior Advocates of Nigeria (SANs), led by Yusuf Ali, to prosecute an 11-ground appeal.
- The CBN has also filed a stay of execution, warning that enforcing the judgment now would cause “systemic risk” and destabilize the banking sector.
MAIN STORY
The legal battle over the ownership and management of Union Bank of Nigeria has entered a critical new phase. Following the Federal High Court’s decision to void the regulator’s intervention, the CBN moved swiftly on March 26 to file an appeal.
The apex bank maintains that its actions were not only lawful but necessary to prevent a total collapse of the 108-year-old institution.
According to court filings, the CBN argued that Union Bank suffered from a massive capital shortfall exceeding N224 billion and a negative capital adequacy ratio at the time of the 2024 intervention.
This case is seen as a major test of the Banks and Other Financial Institutions Act (BOFIA) 2020.
While the trial judge found that the shareholders’ fundamental rights to a fair hearing were breached, the CBN contends that Section 34 of BOFIA gives the Governor explicit power to remove directors of distressed banks to protect depositors.
The outcome of this appeal will likely define the limits of regulatory power in Nigeria’s financial system for years to come.
THE ISSUE
The primary challenge is the “Regulatory Authority vs. Ownership Rights” conflict. The court found that the CBN’s move to dilute shareholding from 100% to 40% and exclude core investors—Titan Trust Bank, Luxis International, and Magna International—constituted “bad faith” and a breach of due process. This “Ownership Erasure” is what led to the nullification of the takeover. To resolve this, the CBN must prove that the “Financial Distress” of the bank was so acute that emergency powers overridden standard procedural rights to ensure the stability of the entire Nigerian banking system.
- WHAT’S BEING SAID
- “The learned trial judge erred in law when he held that the appellant acted ultra vires its statutory powers,” stated the CBN in its grounds of appeal.
- “Statutory powers, no matter how wide, must be exercised strictly within the confines of the law,” held Justice Chukwujekwu Aneke in his judgment.
- “Execution of the judgment could disrupt Union Bank’s governance… and create systemic risk,” the CBN warned in its affidavit for stay of execution.
- “Throughout this period, your accounts and funds have remained completely safe,” Union Bank management reassured customers following the court news.
WHAT’S NEXT
All eyes are now on the Court of Appeal to fix a date for the hearing of the stay of execution. Until that motion is decided, a state of “legal limbo” exists regarding who truly controls the bank’s board. If the stay is granted, the CBN-appointed management, led by Yetunde Oni, will remain in charge during the lengthy appeal process. If denied, the former board led by Farouk Gumel could attempt to resume control immediately. Meanwhile, the CBN has assured the public that Union Bank remains fully operational and that the “status quo” should be maintained to prevent panic among depositors.
BOTTOM LINE
The bottom line is that the CBN is fighting to keep its “regulatory teeth.” If the lower court’s judgment stands, it could limit the apex bank’s ability to intervene in other struggling banks in the future. For Union Bank customers, the message is clear: the boardroom is in a storm, but the vaults remain locked and secure.
