CBN APPEALS COURT RULING NULLIFYING UNION BANK TAKEOVER

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By: Balogun Ibrahim

The Central Bank of Nigeria has filed an appeal against a ruling by the Federal High Court in Lagos that nullified its takeover of Union Bank of Nigeria Plc and ordered the reinstatement of the bank’s former board of directors.

Justice Chukwujekwu Aneke, in a judgment delivered on March 25, 2026, held that the apex bank acted beyond its statutory authority when it dissolved the board and management of the bank.

In response, the CBN, represented by a team of Senior Advocates of Nigeria led by Yusuf Ali (SAN), challenged the decision, calling it legally flawed and inconsistent with the regulatory powers granted under Nigerian banking laws.

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

In a notice of appeal filed on March 26, 2026, the Central Bank of Nigeria listed 11 grounds, urging the appellate court to overturn the Federal High Court’s judgment in full.

“The learned trial judge erred in law when he held that the appellant acted ultra vires its statutory powers,” one of the grounds of appeal stated.

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The apex bank argued that its takeover of Union Bank of Nigeria Plc was warranted due to the bank’s precarious financial condition at the time.

“Evidence presented at the trial clearly demonstrated that Union Bank of Nigeria Plc was in severe financial distress, with a negative capital adequacy ratio, a capital shortfall exceeding N224 billion, and high levels of non-performing loans,” the Central Bank of Nigeria said.

“It was therefore necessary for the appellant, in fulfilling its statutory mandate, to act decisively to protect the stability of the banking system,” it added.

Citing the Central Bank of Nigeria Act and the Banks and Other Financial Institutions Act 2020, the CBN maintained that its actions were fully within the law.

“Section 34 of BOFIA explicitly empowers the Governor of the Central Bank to remove directors and officers of a bank in critical condition, while Section 51 safeguards actions taken in good faith in the performance of statutory duties,” the bank stated.

The CBN also criticized the trial court’s interpretation of these provisions, arguing that it resulted in “a miscarriage of justice.”

“The lower court incorrectly ruled that the appellant’s actions were unlawful, unconstitutional, and ultra vires, and went on to nullify all decisions made by the management appointed by the appellant without any legal foundation,” the Central Bank of Nigeria said.

Alongside the appeal, the apex bank also filed a motion requesting a stay of execution of the judgment pending the outcome of the appeal.

The Central Bank of Nigeria has urged the court to restrain the reinstated directors and other respondents from taking control of Union Bank of Nigeria Plc or interfering in its operations.

“Unless this honourable court grants a stay, the respondents may take steps that could destabilise the governance structure and operations of Union Bank,” the apex bank warned in an affidavit supporting its application.

CBN also requested that the court bar the respondents from convening board or management meetings, altering governance structures, or engaging in media activities that could undermine the bank’s stability.

“The preservation of the status quo is essential to protect the integrity of the banking system and ensure that the appeal is not rendered nugatory,” the bank stated.

The respondents 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.

The Central Bank emphasized that the appeal raises crucial legal questions regarding the scope of its regulatory authority.

“This appeal raises significant and arguable legal questions concerning the powers of the Central Bank under BOFIA and the imperative of maintaining stability in the financial system,” the CBN said.

The appellate court has not yet scheduled a date for hearing the appeal and the related application for a stay of execution.