The Central Bank of Nigeria (CBN) has filed an appeal against the judgement of the federal high court in Lagos which nullified its intervention in the Union Bank of Nigeria and ordered the reinstatement of the bank’s former board.
The apex bank also filed an application to stay the execution of the judgement pending the determination of the appeal, warning that immediate enforcement could disrupt Union Bank’s operations and governance.
In a verdict delivered on March 25, Chukwujekwu Aneke, the presiding judge, ruled that the CBN acted beyond its powers when it removed the board and management of Union Bank of Nigeria in January 2024.
Aneke quashed all the decisions and steps taken by the CBN-appointed board and ordered the immediate reinstatement of the former board, led by Farouk Mohammed Gumel, along with the bank’s management.
The court also barred the CBN, its appointed board, and their agents from taking any step or continuing any steps towards recapitalisation or any other related act.
In its notice of appeal filed on March 26, the CBN raised 11 grounds challenging the decision in its entirety, arguing that the lower court erred in law and occasioned a miscarriage of justice.
The apex bank maintained that its intervention was backed by the provisions of the CBN Act and the Banks and Other Financial Institutions Act (BOFIA) 2020, insisting that it acted within its regulatory mandate.
The CBN said evidence before the trial court showed that Union Bank was in severe financial distress at the time, with a negative capital adequacy ratio, a capital shortfall exceeding N224 billion, and a high level of non-performing loans.
The apex bank argued that BOFIA empowers it to take decisive action in respect of distressed banks, including the removal of directors and officers, and protects such actions when carried out in good faith.
It faulted the trial court’s interpretation of the provisions, arguing that the judgement wrongly declared its actions unlawful and invalidated decisions taken by the management it appointed without establishing a legal basis for reinstating the former board.
In its motion for stay of execution, the apex bank urged the court to restrain the reinstated directors and other respondents from taking control of Union Bank, interfering in its management, or convening board and management meetings.
The CBN also asked the court to prevent the respondents from taking steps, including media engagements, that could destabilise the bank, and sought an order directing all parties to maintain the status quo pending the outcome of the appeal.
In an affidavit supporting the application, the bank warned that enforcing the judgement could undermine public confidence in the financial system and create wider risks for the banking sector.
It added that the appeal raises substantial questions about the scope of its regulatory powers and that, without a stay, the appeal could be rendered nugatory.
To prosecute the appeal, the CBN assembled a team of senior lawyers led by Yusuf Ali. Others on the team are 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 directors of Union Bank such as Bayo Adeleke and Yetunde Oni.
