The Central Bank of Nigeria (CBN) has appealed the judgment of the Federal High Court in Lagos which nullified its intervention in Union Bank of Nigeria and ordered the reinstatement of the bank’s former board.
The apex bank also filed an application seeking a stay of execution of the judgment pending the outcome of the appeal, warning that immediate enforcement could disrupt the bank’s operations and governance.
In a ruling delivered on March 25, Justice Chukwujekwu Aneke held that the CBN exceeded its powers when it removed the board and management of Union Bank of Nigeria in January 2024.
The judge set aside all actions taken by the CBN-appointed board and directed the immediate reinstatement of the former board, led by Farouk Mohammed Gumel, along with the bank’s management.
The court also restrained the CBN, its appointed board, and their agents from taking further steps toward recapitalisation or any related actions.
In its notice of appeal filed on March 26, the CBN raised 11 grounds challenging the judgment, arguing that the lower court erred in law and caused a miscarriage of justice.
The apex bank maintained that its intervention was supported by the provisions of the CBN Act and the Banks and Other Financial Institutions Act (BOFIA) 2020, insisting that it acted within its regulatory authority.
According to the CBN, evidence before the trial court showed that Union Bank was in serious financial distress at the time, with a negative capital adequacy ratio, a capital shortfall exceeding N224 billion, and a high volume of non-performing loans.
The bank argued that BOFIA empowers it to take decisive measures in dealing with distressed financial institutions, including removing directors and officers, and protects such actions when carried out in good faith.
It criticised the trial court’s interpretation of the law, stating that the judgment wrongly declared its actions unlawful and invalidated decisions taken by its appointed management without a proper legal basis for reinstating the former board.
In its motion for stay of execution, the CBN asked the court to restrain the reinstated directors and other respondents from assuming control of Union Bank, interfering with its management, or convening board and management meetings.
The apex bank also urged the court to prevent the respondents from taking steps, including media engagements, that could destabilise the bank, and requested an order directing all parties to maintain the status quo pending the determination of the appeal.
In a supporting affidavit, the CBN warned that enforcing the judgment could erode public confidence in the financial system and pose broader risks to the banking sector.
It added that the appeal raises significant questions about the scope of its regulatory powers and that, without a stay, the appeal could be rendered nugatory.
To handle the appeal, the CBN assembled a team of senior lawyers led by Yusuf Ali. Other members include Kemi Pinheiro, Tunde Fagbohunlu, Uche Val Obi, and Chukwudi Enebeli.
The respondents in the suit include Titan Trust Bank Limited, Luxis International DMCC, Magna International DMCC, and former Union Bank directors such as Bayo Adeleke and Yetunde Oni.
