Court Voids CBN Takeover of Union Bank, Orders Board Reinstatement

• Declares apex bank’s intervention in January 2024 unlawful, unconstitutional, ultra vires 

•Says shareholders denied fair hearing, fundamental rights breached 

•Apex bank reacts, says it will obtain CTC for review, reaffirms commitment to rule of law

Nume Ekeghe and  Wale Igbintade in Lagos

Justice Chukwujekwu Aneke of the Federal High Court, Lagos, has delivered a landmark ruling declaring that Central Bank of Nigeria (CBN) acted beyond its statutory powers in dissolving the board and management of Union Bank of Nigeria Plc.

The detailed judgement, spanning 152 pages and delivered yesterday in Suit No: FHC/L/MISC/1377/2025, held that CBN’s January 2024 intervention was unlawful, unconstitutional, and taken in excess of its powers under the Banks and Other Financial Institutions Act (BOFIA) 2020.

The suit was filed by Titan Trust Bank Limited, Luxis International DMCC, and Magna International DMCC, as plaintiffs, against the apex bank’s Governor, CBN, Mr. Bayo Adeleke, Mrs. Yetunde B. Oni, Mrs. Oluyinka Abimbola Morgan, Mr. Ibrahim Musa Oruma, Mrs. Chiamaka Ezenwa, Mr. Muhammed Balarabe, Mrs. Eileen C. Shaiyen, Dr. Mojisola Olateru-Olagbegi, Mr. Mannir U. Ringim, Mr. Taiwo Shote, Mr. Kelechi Nwagba, and Union Bank of Nigeria Plc, as respondents.

The applicants challenged CBN’s decision to dissolve the board and management of Union Bank of Nigeria Plc, appoint a new leadership, and initiate a recapitalisation process that allegedly diluted their shareholding and excluded them from participating in key corporate decisions.

However, in a statement signed by Acting Director, Corporate Communications, Hakama Sidi Ali, yesterday, CBN said it was currently obtaining the Certified True Copy of the judgement for detailed review, while reaffirming its commitment to due process and the rule of law.

In his judgement, Aneke resolved the core issue in favour of the applicants, holding that CBN and its governor acted ultra vires (beyond the scope of their legal authority), when they dissolved the bank’s board and replaced it.

“The acts of the 1st and 2nd respondents in the dissolution of the erstwhile Board… were not done in compliance with Section 34 of BOFIA but were ultra vires,” the court held.

The judge granted a series of consequential orders that effectively nullified the entire regulatory intervention.

Among the reliefs was an order of certiorari quashing CBN’s public announcement dissolving Union Bank’s board, as well as all actions taken by the regulator-appointed management.

The court also issued an order of mandamus directing the immediate restoration of the former board and management of the bank, led by its erstwhile Chairman, Mr. Farouk Mohammed Gumel.

In addition, the court restrained CBN and all respondents from exercising any powers relating to the governance of the bank, including restructuring its share capital, altering its ownership structure, or taking steps capable of affecting the applicants’ proprietary interests.

Of particular significance, the court halted the ongoing recapitalisation programme initiated under the CBN-appointed board, including the “accelerated two-stage investor selection process” involving financial advisers, such as Absa Capital Markets Nigeria Limited and Vetiva Advisory Services Limited.

The court held that all such actions, having flowed from an unlawful foundation, could not stand.

Beyond the issue of statutory authority, the court made strong findings on the conduct of the regulator, holding that the applicants’ fundamental rights were breached in the course of the intervention.

Aneke found that the applicants were sanctioned based on alleged regulatory infractions without being afforded a fair hearing.

According to the court, although CBN relied on findings from a purported special examination of the bank, the affected shareholders were neither given an opportunity to respond to the allegations nor were their representations considered.

The court further stated that the applicants’ shareholding was reduced from 100 per cent to 40 per cent and they were barred from participating in the recapitalisation of the bank, actions for which, the judge held, no legal basis was established.

“These acts show bad faith and breach of the applicants’ fundamental rights,” the court declared.

The judgement also addressed CBN’s argument that its actions were part of routine supervisory and prudential oversight aimed at safeguarding depositors and ensuring financial system stability.

The apex bank had relied on findings from its examinations of Union Bank, which reportedly revealed severe financial distress, including a negative capital adequacy ratio of 22.44 per cent, a capital shortfall of over N224 billion, and a non-performing loan ratio of 37.48 per cent.

While acknowledging the regulatory role of CBN, the court held that such powers must be exercised strictly within the confines of the law.

It emphasised that failure to comply with statutory provisions, particularly those governing intervention in financial institutions, rendered such actions invalid, regardless of the underlying justification.

On whether the court had jurisdiction in light of Section 51 of BOFIA, which limits actions against CBN, Aneke held that the provision did not bar judicial review where a public authority was alleged to have acted outside its powers.

The court also ruled that the actions of the CBN-appointed board and management were subject to judicial review, describing them as agents of the apex bank whose decisions could not stand independently of the principal’s authority.

Addressing procedural objections raised by the respondents, including alleged non-compliance with the Federal High Court (Civil Procedure) Rules, the court held that such rules were directory, not mandatory, and that any non-compliance did not invalidate the proceedings.

Another key aspect of the judgement was the court’s recognition of a “continuing injury” suffered by the applicants.

Aneke stated that between January 2024 and December 2025, no meetings of the bank were convened with the applicants, who were the sole shareholders, nor were they involved in any management or decision-making processes.

The court held that their exclusion from the affairs of the bank, coupled with major decisions taken during the period, including the commencement of recapitalisation, constituted a continuing violation, thereby exempting the case from statutory limitation periods.

On damages, the court held that while the respondents admitted that the applicants invested $190 million in Union Bank, additional claims could not be granted in the absence of oral evidence.

The judge reiterated that claims for damages must be strictly proved through viva voce evidence, and accordingly declined to award further monetary relief beyond the admitted sum.

The judgement also dismissed multiple interlocutory applications and preliminary objections filed by the respondents seeking to set aside earlier court orders or strike out the suit, paving the way for a determination on the merits.

CBN Affirms Union Bank’s Stability, Says Operations Remain Unaffected by Court Judgement

Meanwhile, Central Bank of Nigeria (CBN) said the status of Union Bank of Nigeria Plc (UBN) remained unchanged following a Federal High Court judgement delivered in Lagos on March 25, 2026, relating to its regulatory action on the lender in January 2024.

In a statement, signed by Acting Director, Corporate Communications, Hakama Sidi Ali yesterday, the apex bank said it was currently obtaining the Certified True Copy of the judgment for detailed review, while reaffirming its commitment to due process and the rule of law.

It stated, “The Central Bank of Nigeria (CBN) acknowledges the judgment delivered on Wednesday, March 25, 2026, by the Federal High Court in Lagos concerning its regulatory action on Union Bank of Nigeria Plc (UBN) in January 2024.

“The Bank is currently obtaining the Certified True Copy of the judgment and will review it carefully, reaffirming its unwavering commitment to the rule of law.

“As the apex regulatory authority, the CBN remains committed to acting in accordance with its mandate and established legal processes. The CBN assures the public that UBN’s status is unchanged and that it remains fully capable of meeting its obligations to customers, depositors, and all stakeholders.”

It also assured the public that Union Bank remained stable and fully capable of meeting its obligations to customers, depositors, and other stakeholders.

The statement said, “The CBN will continue to provide the necessary regulatory oversight to ensure Union Bank operates in a safe, sound, and stable manner, while maintaining public confidence in the financial system.”