Juliet Ezeh
A landmark judgment by the Federal High Court in Lagos has delivered a major blow to the regulatory authority of the Central Bank of Nigeria, declaring its controversial takeover of Union Bank as unlawful and a breach of statutory limits.
In a ruling that could redefine the boundaries of financial regulation in Nigeria, Justice Chukwujekwu Aneke held that the apex bank exceeded its legal powers when it dissolved the board and management of Union Bank of Nigeria in January 2024.
The court described the intervention as ultra vires, stressing that even the broad powers granted to regulators under the Banks and Other Financial Institutions Act (BOFIA) 2020 must be exercised strictly within the law.
At the heart of the dispute was a power struggle over control and ownership. The applicants—Titan Trust Bank Limited and its affiliated investors—argued that the CBN’s actions not only sidelined them but also significantly diluted their ownership stake, cutting it from full control to just 40 per cent without due process.
In a sweeping judgment, the court nullified all actions taken under the CBN-appointed management, ordered the immediate reinstatement of the previous board led by Farouk Mohammed Gumel, and restrained the apex bank from further interference in the bank’s governance.
The ruling also halted an ongoing recapitalisation programme initiated during the regulatory intervention, effectively resetting the bank’s governance structure to its pre-2024 state.
Beyond corporate control, the court raised serious constitutional concerns, finding that the investors were denied fair hearing—a violation that fundamentally undermined the legitimacy of the entire intervention.
Justice Aneke was particularly critical of the manner in which decisions were taken without engaging the affected parties, describing the sequence of actions as evidence of bad faith.
While the CBN had justified its move by pointing to financial instability within the bank—including a capital shortfall exceeding N224bn and rising non-performing loans—the court maintained that regulatory urgency does not override the rule of law.
The judgment further clarified that no regulatory body is beyond judicial scrutiny, firmly rejecting arguments that the CBN’s actions were protected under statutory immunity.
Legal analysts say the decision could have far-reaching implications, not only for banking regulation but also for investor confidence, as it reinforces the principle that government agencies must operate within clearly defined legal boundaries.
For Nigeria’s financial system, the ruling sends a strong signal: regulatory power is not absolute, and due process remains the ultimate safeguard in corporate governance disputes.
Juliet Ezeh is the founder and chief reporter at Westbridge Reporters with over 7 years of experience in journalism. She covers crime, industry, policy, and social developments, delivering timely and accurate reporting.