A Federal High Court in Lagos has delivered a landmark ruling that could reshape the landscape of banking regulation in Nigeria, nullifying the Central Bank of Nigeria’s takeover of Union Bank of Nigeria Plc and declaring the regulator’s actions unlawful.
Justice Chukwujekwu Aneke delivered the judgment on March 26, 2026, in Suit No: FHC/L/MISC/1377/2025, ruling that the CBN exceeded its statutory powers when it dissolved Union Bank’s board and management in January 2024. The judge ordered the immediate reinstatement of the former board led by Farouk Gumel.
The Roots of the Dispute
The conflict traces back to January 2024, when the CBN intervened in Union Bank — an institution that had been a pillar of Nigeria’s financial system since 1917 — citing the bank’s failure to meet recapitalisation thresholds and corporate governance deficiencies. The regulator appointed an interim board and initiated a recapitalisation process.
Titan Trust Bank Limited, alongside Luxis International DMCC and Magna International DMCC — which together claimed to hold majority ownership of Union Bank — challenged the intervention in court. They argued that the CBN’s actions unlawfully diluted their shareholding from 100% to 40% and excluded them entirely from the recapitalisation exercise.
What the Court Found
In his ruling, Justice Aneke determined that the CBN’s actions were "ultra vires" — beyond its legal powers — and violated the Banks and Other Financial Institutions Act 2020 (BOFIA). The court found that the core shareholders were not given the opportunity to respond to allegations of regulatory infractions before sanctions were imposed, a fundamental breach of their right to fair hearing.
"The applicants suffered a continuing injury," the judge noted, pointing out that between January 2024 and December 2025, the shareholders were excluded from all management and key corporate decisions while significant actions were taken under the CBN-appointed board.
The court also rejected the CBN’s argument that Section 51 of BOFIA shielded it from judicial review. Justice Aneke held that while the CBN enjoys broad supervisory powers, those powers must be exercised strictly within the law — and when they are not, courts have the authority to intervene.
CBN’s Defense
The Central Bank had defended its actions as necessary prudential oversight, citing severe financial distress at Union Bank: a negative capital adequacy ratio, a capital shortfall exceeding N224 billion, and a high non-performing loan ratio. The regulator maintained that removing the board was a measured response to protect depositors and the broader financial system. Despite these concerns, the court ruled that the regulatory remedy must not override statutory protections and due process rights.
A Landmark for Nigerian Banking
The ruling sets a significant precedent for the Nigerian banking sector. While the CBN has a documented history of intervening in troubled banks — having removed the board of First Bank of Nigeria Holdings Plc in 2021 and dissolved Skye Bank in 2016 — the Union Bank case is the first in which a court has explicitly ruled that such intervention was beyond the regulator’s powers.
The judgment restrains the CBN from exercising any governance powers over Union Bank pending further orders, effectively freezing the recapitalisation programme designed to bring the bank in line with the apex bank’s N500 billion minimum capital requirement for commercial banks by March 31, 2026.
Market and Regulatory Implications
Union Bank’s iconic head office on Marina in Lagos has been a fixture of Nigeria’s financial district for over a century. Its fate is being watched closely by investors, regulators, and competitors alike. The case raises critical questions about the balance between regulatory autonomy and institutional accountability in Nigeria’s banking sector.
The Federal Government has signalled it may appeal the ruling. Legal analysts expect the case to reach higher courts, with implications that could extend well beyond Union Bank.