A Federal High Court in Lagos has ruled that the Central Bank of Nigeria (CBN) acted beyond its legal powers when it dissolved the board and management of Union Bank of Nigeria.
Delivering judgment, Justice Chukwujekwu Aneke said the CBN’s action did not comply with the provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020.
He described the move as “ultra vires,” meaning the regulator exceeded its authority.
The case was brought by Titan Trust Bank Limited, Luxis International DMCC, and Magna International DMCC, who claim to be the beneficial owners of Union Bank.
They challenged the CBN’s decision to remove the bank’s leadership, appoint a new management team, and begin a recapitalisation process.
The applicants argued that the recapitalisation exercise reduced their shareholding from 100 per cent to 40 per cent and excluded them from major decisions affecting the bank.
In his ruling, the judge nullified the CBN’s intervention and all actions taken by the management it appointed. He also ordered the immediate reinstatement of the former board and management led by Farouk Gumel.
The court further restrained the CBN from interfering in the bank’s governance, including restructuring its share capital or changing its ownership structure. It also halted the ongoing recapitalisation and investor selection process.
On the issue of fair hearing, the court held that the applicants’ rights were violated because they were not given the opportunity to respond to allegations before sanctions were imposed. The judge described the actions as being carried out in bad faith.
The dispute began in January 2024 when the CBN dissolved the boards of Union Bank, Keystone Bank, and Polaris Bank over alleged regulatory breaches and governance failures. The CBN is yet to officially respond but may appeal the decision.
