The ongoing debate surrounding Union Bank of Nigeria and the intervention by the Central Bank of Nigeria has sparked intense commentary across Nigeria’s financial and legal circles.
Yet beneath the headlines and emotional reactions lies a far more complex issue involving regulatory oversight, corporate governance, financial stability, and the protection of millions of depositors.
At the centre of the controversy is the 2022 acquisition of approximately 94 per cent of Union Bank by Titan Trust Bank through Dubai-based entities linked to the Tropical General Investments (TGI) Group. The transaction, valued at about $300 million, was reportedly financed largely through an Afreximbank facility.
However, regulatory concerns emerged after a forensic audit allegedly found that the acquisition financing was ultimately reflected on Union Bank’s own books, contrary to the Central Bank’s long-standing policy prohibiting the use of borrowed funds to acquire shares in licensed financial institutions. Regulators argue that such arrangements weaken the capital base of banks and expose them to significant financial vulnerabilities.
According to documents cited in the ongoing legal proceedings, the bank’s capital adequacy ratio reportedly deteriorated following exchange-rate losses linked to the unhedged foreign currency exposure associated with the acquisition financing.
The situation allegedly contributed to mounting non-performing loan exposure and a significant capital shortfall.
The Central Bank subsequently intervened under provisions of the Banks and Other Financial Institutions Act (BOFIA) 2020 and the CBN Act 2007, dissolving the board and taking supervisory actions aimed at stabilising the institution.
While critics of the intervention have questioned the legality and process of the CBN’s actions, both the apex bank and Union Bank have now filed appeals challenging aspects of the Federal High Court ruling on the matter.
Legal arguments before the appellate court include questions surrounding regulatory powers, shareholder standing, statutory limitation periods, and the scope of supervisory authority granted to financial regulators under Nigerian law.
Beyond the courtroom arguments, the case carries significant implications for financial stability. Union Bank, one of Nigeria’s oldest financial institutions, serves approximately 7.8 million depositors and employs over 6,000 workers nationwide.
Regulatory authorities maintain that the intervention was necessary to safeguard depositors, preserve systemic stability, and prevent broader risks to the banking sector.
Supporters of the CBN’s position also point to broader market indicators suggesting that investor confidence in Nigeria’s banking system remains intact.
Nigeria’s ongoing banking recapitalisation exercise has reportedly attracted trillions of naira in fresh capital commitments, while market performance on the Nigerian Exchange has remained relatively strong.
Analysts note that the dispute ultimately raises a larger question about the balance between regulatory intervention and shareholder rights in safeguarding financial institutions considered systemically important to the economy.
For now, the final legal determination rests with Nigeria’s appellate courts, which are expected to clarify the scope of regulatory authority and corporate governance obligations in one of the country’s most closely watched banking disputes.
