Court voids CBN’s takeover of Union Bank’s board

The Federal High Court in Lagos has declared that the Central Bank of Nigeria (CBN) acted outside its statutory authority in dissolving the board and management of Union Bank of Nigeria Plc, noting that the regulator acted beyond its powers. Delivering judgement on Wednesday in a suit marked FHC/L/MISC/1377/2025, the judge, Chukwujekwu Aneke, held that […]

The Federal High Court in Lagos has declared that the Central Bank of Nigeria (CBN) acted outside its statutory authority in dissolving the board and management of Union Bank of Nigeria Plc, noting that the regulator acted beyond its powers.

Delivering judgement on Wednesday in a suit marked FHC/L/MISC/1377/2025, the judge, Chukwujekwu Aneke, held that CBN’s actions were ultra vires and not in compliance with the provisions of the Banks and Other Financial Institutions Act 2020 (BOFIA).

According to the court filings, Titan Trust Bank Limited, alongside Luxis International DMCC and Magna International DMCC, claimed to be the ultimate beneficial owners of Union Bank.

They challenged the CBN’s dissolution of the bank’s board, the appointment of a new management, and the initiation of a recapitalisation process that allegedly diluted their shareholding and excluded them from key decisions.

In his ruling, the judge nullified the entire regulatory intervention and granted other prayers in favour of the applicants.

He also set aside the CBN’s public announcement dissolving the board and invalidated all actions taken by the regulator-appointed management.

The court also ordered the immediate reinstatement of the former board and management led by Farouk Gumel.

Mr Aneke further restrained the CBN and other respondents from exercising any powers over the bank’s governance, including restructuring its share capital or altering its ownership structure.

 

He also halted the ongoing recapitalisation process and investor selection programme initiated under the CBN-appointed board.

 

On the issue of fair hearing, the court held that the applicants’ fundamental rights were breached, noting that they were sanctioned without being given an opportunity to respond to allegations of regulatory infractions arising from a purported special examination of the bank.

 

The judge found that the applicants’ shareholding was reduced from 100 per cent to 40 per cent and that they were excluded from participating in the recapitalisation exercise without legal justification, describing the actions as indicative of bad faith.

 

On jurisdiction, the court ruled that Section 51 of BOFIA does not shield the CBN from judicial review where it acts outside its statutory powers.

 

It also held that the actions of the CBN-appointed board were subject to review, describing them as agents of the apex bank.

 

There was no comment from the CBN as of press time but a source told our correspondent that the bank would address the court verdict today (Thursday).

 

It was further gathered that the bank may appeal the verdict based on advice.

 

Back story

 

Checks by Daily Trust showed that the dispute started from the CBN’s January 2024 intervention, when it dissolved the boards and management of Union Bank, Keystone Bank and Polaris Bank over alleged regulatory breaches and corporate governance failures.

 

At the time, the apex bank cited provisions of BOFIA, referencing the bank’s non-compliance with licensing conditions, threats to its financial stability, its failure to adhere to regulatory directives, and its undercapitalisation, as justification for the intervention.

 

It subsequently appointed interim management to take over the affected institutions and initiated corrective measures, including recapitalisation and restructuring programmes.

 

Under BOFIA, the CBN is empowered to intervene in troubled banks, including removing directors where a “grave situation” is identified.