A Federal High Court in Lagos has declared the Central Bank of Nigeria’s (CBN) dissolution of the board and management of Union Bank of Nigeria Plc unlawful, ruling that the apex bank exceeded its statutory powers.
Delivering judgment in the suit, Justice Chukwujekwu Aneke held that the CBN’s January 2024 intervention violated provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and was carried out outside its legal authority.
The case was instituted by Titan Trust Bank Limited, alongside Luxis International DMC C and Magna International DMCC, who identified themselves as the ultimate beneficial owners of Union Bank.
They challenged the regulator’s decision to dissolve the bank’s board, appoint a new management, and initiate a recapitalisation process which allegedly diluted their shareholding and excluded them from critical governance decisions.
In his ruling, Justice Aneke nullified the CBN’s intervention in its entirety, quashing the public announcement that removed the board and invalidating all actions taken by the regulator-appointed management.
The court ordered the immediate reinstatement of the former board and management led by Farouk Mohammed Gumel.
It also restrained the Central Bank of Nigeria and other respondents from exercising any control over the bank’s governance, including restructuring its share capital or altering its ownership structure.
Additionally, the court halted the ongoing recapitalisation and investor selection process initiated under the CBN-appointed leadership.
Beyond statutory breaches, the court held that the applicants’ fundamental rights were violated, noting that they were sanctioned without being afforded a fair hearing despite allegations stemming from a regulatory examination.
Justice Aneke observed that the applicants’ shareholding was reduced from 100 per cent to 40 per cent and described the actions as evidence of bad faith.
Although the CBN had defended its intervention on the grounds of prudential oversight—citing financial distress, including a capital shortfall exceeding N224 billion and a high non-performing loan ratio—the court emphasised that regulatory powers must be exercised strictly within the law.
On jurisdiction, the court clarified that BOFIA does not shield the apex bank from judicial review when it acts beyond its powers, adding that the actions of the CBN-appointed board were subject to scrutiny as agents of the regulator.
The court also dismissed procedural objections raised by the respondents, ruling that they were not sufficient to invalidate the suit.
Justice Aneke further held that the applicants suffered a “continuing injury,” having been excluded from the bank’s management and decision-making processes for nearly two years.
While acknowledging that the applicants invested $190 million in the bank, the court declined additional damages due to lack of oral evidence supporting further claims.