Union Bank of Nigeria Plc is facing a deepening governance crisis after a Federal High Court ruling overturned the Central Bank of Nigeria’s (CBN) 2024 intervention, triggering a legal battle that could have wide implications for the country’s banking sector.
The CBN has appealed the March 25, 2026 judgment, which nullified its takeover of the bank and ordered the reinstatement of the former board and management. The regulator is also seeking a stay of execution to prevent immediate enforcement of the ruling, warning that it could destabilise the bank and weaken confidence in Nigeria’s financial system.
The dispute stems from January 2024, when the CBN dissolved the boards of Union Bank, Keystone Bank and Polaris Bank. The regulator cited corporate governance failures, regulatory breaches and worsening financial conditions as reasons for its intervention.
Following the takeover, the CBN installed new management teams to stabilise the affected banks and oversee recapitalisation efforts aimed at strengthening their financial positions.
However, the move was challenged by core shareholders, including Titan Trust Bank Limited and related entities. They argued in court that the central bank exceeded its statutory powers and diluted shareholder interests without due process.
After months of litigation, the Federal High Court ruled in favour of the shareholders. It declared the CBN’s actions unlawful and unconstitutional, ordered the reinstatement of the previous board, and voided decisions taken under the CBN-appointed management.
The judgment also halted the bank’s recapitalisation process, creating uncertainty around its capital restructuring efforts at a time when Nigerian banks are under pressure to meet new regulatory capital thresholds.
The CBN, in its appeal, defended its intervention, stating that it acted within the provisions of the CBN Act and the Banks and Other Financial Institutions Act 2020. The regulator maintained that Union Bank was in a distressed state at the time of the takeover.
According to the apex bank, the lender had a negative capital adequacy ratio, a capital shortfall exceeding N224 billion, and high levels of non-performing loans. It argued that these conditions posed risks not only to depositors but also to the stability of the broader financial system.
The central bank further contended that the lower court misinterpreted the law by limiting its authority to intervene in troubled banks. It warned that restricting its oversight powers could undermine effective financial regulation.
As part of its legal strategy, the CBN is asking the Court of Appeal to restrain the reinstated directors from assuming control or making governance changes while the case is pending. It also urged all parties to maintain the status quo and avoid actions that could disrupt the bank’s operations.
The situation has created competing claims over control of Union Bank, leaving uncertainty about which leadership structure should prevail until the appellate court delivers its decision.
Despite the ongoing legal battle, Union Bank has stated that its operations remain stable. However, analysts note that the dispute introduces risks at a sensitive time for the banking industry.
Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co, said the case is still in its early stages and no final determination has been made. He indicated that the bank is expected to continue normal operations until there is greater legal clarity.
Olubunmi added that banks are increasingly focused on strengthening their balance sheets and improving risk management as the recapitalisation phase winds down.
He noted that attention is shifting toward generating sustainable returns, which will require expanding loan portfolios, boosting revenue streams and improving efficiency in asset deployment.
Meanwhile, Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, called for policy adjustments as the recapitalisation programme nears completion.
He urged authorities to prioritise measures that better connect the banking system to the real economy, including scaling up credit guarantee schemes to support small and medium-sized enterprises.
Yusuf also highlighted the need to improve credit infrastructure, encourage long-term financing and ensure that monetary policy leads to lower borrowing costs for businesses.
The outcome of the Union Bank case is expected to set a significant precedent for Nigeria’s financial sector. It will likely define the balance between regulatory authority and shareholder rights, and determine how far the central bank can go in intervening in distressed institutions without triggering legal challenges.
