Court Nullifies CBN’s Union Bank Takeover, Orders Reinstatement of Board
A Federal High Court in Lagos has voided the January 2024 intervention by the Central Bank of Nigeria (CBN) in Union Bank of Nigeria Plc, declaring the dissolution of the bank’s board and management unlawful and unconstitutional.
In a landmark judgement delivered Wednesday, Justice Chukwujekwu Aneke held that the apex bank acted outside its statutory powers under the Banks and Other Financial Institutions Act (BOFIA) 2020 when it removed the lender’s leadership and installed a new management.
The suit, instituted by Titan Trust Bank Limited alongside Luxis International DMCC and Magna International DMCC, challenged the CBN’s actions, including the board’s dissolution, appointment of a new management team, and the initiation of a recapitalisation process that allegedly diluted shareholders’ equity and excluded them from key decisions.
In a 152-page ruling, the court resolved the central issue in favour of the plaintiffs, declaring the intervention “ultra vires” and not in compliance with the provisions of BOFIA.
Justice Aneke consequently issued a series of far-reaching orders nullifying the entire exercise. These included an order quashing the CBN’s announcement dissolving the board and invalidating all decisions taken by the regulator-appointed management.
The court also directed the immediate reinstatement of the former board and management of Union Bank, led by its erstwhile Chairman, Farouk Mohammed Gumel, and restrained the CBN from further interference in the bank’s governance, ownership structure, or share capital.
Significantly, the court halted the ongoing recapitalisation programme initiated under the CBN-appointed leadership, including the investor selection process involving financial advisers, ruling that all actions stemming from the intervention could not stand.
Beyond questions of statutory authority, the court found that the apex bank breached the fundamental rights of the affected shareholders by failing to grant them a fair hearing before taking regulatory action.
Justice Aneke held that although the CBN relied on findings from a special examination of the bank, the shareholders were neither given the opportunity to respond to the allegations nor included in subsequent decision-making processes.
The court noted that the plaintiffs’ shareholding was reduced from full ownership to 40 per cent and that they were excluded from participating in the recapitalisation exercise without legal justification—actions it described as evidence of bad faith.
While acknowledging the CBN’s mandate to safeguard financial stability and protect depositors, the court emphasised that such powers must be exercised strictly within the bounds of the law.
It further ruled that statutory provisions limiting actions against the CBN did not preclude judicial review where the regulator acts outside its legal authority.
The court also dismissed procedural objections raised by the respondents and held that the exclusion of the plaintiffs from the bank’s affairs over an extended period constituted a “continuing injury,” thereby allowing the suit to proceed despite time limitations.
On damages, the court declined to award additional monetary relief beyond the admitted $190 million investment by the plaintiffs, citing the absence of oral evidence to substantiate further claims.
Reacting to the judgement, the CBN said it was in the process of obtaining the Certified True Copy (CTC) for a detailed review, while reaffirming its commitment to due process and the rule of law.
The apex bank also sought to reassure stakeholders, stating that Union Bank’s operations remain stable and unaffected by the court ruling. It maintained that the lender is fully capable of meeting its obligations to customers and depositors and pledged to continue providing regulatory oversight to ensure the bank’s safety and soundness.