CBN Challenges Court Verdict Voiding Union Bank Takeover, Moves to Stop Reinstated Board

Wale Igbintade

The Central Bank of Nigeria (CBN) has filed an appeal against the Federal High Court, Lagos Division’s judgment that voided its takeover of Union Bank of Nigeria Plc and ordered the reinstatement of the bank’s former board of directors.

The March 25 ruling, delivered by Justice Chukwujekwu Aneke, held that the apex bank acted beyond its statutory powers in dissolving the board and management of Union Bank.

In response, the CBN has engaged a formidable legal team of Senior Advocates of Nigeria (SANs) to prosecute the appeal, led by Yusuf Ali, SAN.

Other members of the team include Kemi Pinheiro, SAN; Tunde Fagbohunlu, SAN; Uche Val Obi, SAN; and Chukwudi Enebeli, SAN.

The appeal, filed on March 26, raises 11 grounds challenging the lower court’s decision in its entirety.

The CBN contended that it acted within its statutory authority under the Central Bank of Nigeria Act and the Banks and Other Financial Institutions Act (BOFIA) 2020 to intervene in Union Bank’s affairs due to severe financial distress.

Evidence before the trial court, the apex bank argued, showed that at the time of intervention, Union Bank had a negative capital adequacy ratio, a capital shortfall exceeding N224 billion, and high levels of non-performing loans, justifying regulatory action to safeguard the banking system.

The CBN further maintained that Section 34 of BOFIA empowers the Governor to remove directors and officers of a bank in critical condition, while Section 51 protects actions taken in good faith in the discharge of statutory duties.

It argued that the lower court failed to interpret these provisions correctly, resulting in a miscarriage of justice.

According to the apex bank, the judgment incorrectly declared its actions unlawful, ultra vires, and unconstitutional, and wrongly nullified the acts of the management it appointed, including board decisions and administrative acts, without establishing a legal duty for the former board’s reinstatement.

In conjunction with the appeal, the CBN filed a motion on notice seeking a stay of execution of the Federal High Court judgment pending the determination of the appeal.

The motion asks the court to restrain the reinstated directors and other respondents from taking control of Union Bank, interfering with its management and operations, convening board or management meetings, or altering governance structures.

It also seeks to prevent respondents from engaging in media publicity or actions that could destabilize the bank, and requests an order directing all parties to maintain the status quo until the appeal is resolved.

The respondents in the appeal include Titan Trust Bank Limited, Luxis International DMCC, Magna International DMCC, and several former directors of Union Bank, including Bayo Adeleke and Yetunde Oni.

They had approached the Federal High Court as ultimate beneficiaries of Union Bank shares, challenging the CBN’s intervention.

In an affidavit supporting the stay application, the CBN warned that execution of the judgment could disrupt Union Bank’s governance and operations, undermine public confidence in the banking sector, and create systemic risk.

The apex bank emphasised that the appeal raises substantial questions of law regarding the scope of its regulatory powers and that failure to grant a stay could render the appeal nugatory.

Preserving the status quo, it argued, is critical to ensuring stability in the banking sector and allowing the appellate court to properly adjudicate a case that could have far-reaching implications for regulatory authority under Nigeria’s banking laws.