Central Bank of Nigeria Appeals Court Order Reinstating Union Bank Board Amid Financial Distress Claims

The Central Bank of Nigeria challenges a court ruling reinstating the Union Bank board, citing a N224 billion capital shortfall and systemic risks.

By: AXL Media

Published: Mar 27, 2026, 4:39 PM EDT

Source: The information in this article was sourced from THISDAYLIVE

Legal Battle Over Regulatory Authority

The Central Bank of Nigeria has officially appealed a judgment from the Lagos Division of the Federal High Court which voided its previous takeover of Union Bank of Nigeria Plc. On March 25, Justice Chukwujekwu Aneke ruled that the apex bank had exceeded its statutory powers by dissolving the financial institution's board and management. In a swift response, the regulator assembled a high level legal team led by Yusuf Ali and other Senior Advocates of Nigeria to overturn the decision. The appeal, filed on March 26, marks a significant confrontation regarding the boundaries of banking supervision and the executive powers of the central bank governor.

Claims of Severe Financial Instability

At the heart of the central bank's defense is the assertion that Union Bank was in a state of severe financial distress at the time of the regulatory intervention. According to evidence presented by the apex bank, the institution suffered from a negative capital adequacy ratio and a capital deficit exceeding N224 billion. Regulators maintain that the high volume of non performing loans necessitated immediate action to prevent a broader collapse of the national banking system. The appeal argues that these fiscal realities justified the use of emergency powers to safeguard depositors and maintain institutional stability.

Interpreting the Mandate of the Banking Act

The central bank contends that the lower court failed to accurately interpret the Banks and Other Financial Institutions Act of 2020. Specifically, the regulator cites Section 34 of the act, which grants the Governor the authority to remove directors of banks found to be in critical condition. Furthermore, the legal team pointed to Section 51, which provides protection for actions taken in good faith during the discharge of statutory duties. By failing to uphold these provisions, the central bank argues that the trial court reached a conclusion that is both unconstitutional and ultra vires, potentially setting a dangerous precedent for future regulatory oversight.