Stewardship, not seizure: What the Union Bank case is really about
Union Bank Case Highlights Legal and Financial Complexities
By Cynthia Alo
In the ongoing discussion surrounding the Union Bank of Nigeria, some financial commentary has conflated legal procedures with factual conclusions. Following a court’s initial ruling, narratives have quickly crystallized, portraying the Central Bank of Nigeria (CBN) as an overreaching regulator, causing a crisis of investor confidence and putting Nigeria’s financial governance on trial.
While there are valid points raised regarding procedural issues, much of this commentary overlooks critical facts, which can significantly misinform public perception and understanding.
Background of the Acquisition
The situation stems from Titan Trust Bank Limited’s acquisition of approximately 94 percent of Union Bank of Nigeria in 2022. This transaction was facilitated by two Dubai-registered entities, Luxis International DMCC and Magna International DMCC, associated with the Tropical General Investments (TGI) Group, for a total of $300 million primarily funded through a loan from Afreximbank.
The CBN has made it clear that acquiring shares in licensed financial institutions using borrowed funds is against its policy, a principle designed to protect institutions’ capital bases. A forensic audit revealed that the Afreximbank loan was recorded on Union Bank’s own financial statements without adequate measures to mitigate against naira depreciation. Consequently, as the currency weakened, losses mounted, leading to a deteriorating capital adequacy ratio and a significant increase in non-performing loans.
Union Bank’s financial struggles and continuing regulatory violations were reported to its board and former Managing Director, Mudassir Amray, during a special examination. Claims that the CBN’s actions lacked evidentiary support before dissolving the bank’s board are not substantiated by the records.
Legal Proceedings
The CBN’s intervention was conducted under Section 34 of the Banks and Other Financial Institutions Act (BOFIA) 2020 and Section 52 of the CBN Act of 2007, which provide the bank with broad discretionary powers. Notably, these powers do not necessitate a special examination prior to execution.
The Federal High Court’s characterization of these powers as quasi-judicial is now under appeal. Both the CBN and Union Bank have filed formal appeals. Union Bank’s Notice of Appeal challenges the ruling on several grounds, including questions of standing and the timing of legal action, as well as the legality of the CBN-supervised recapitalization process. These matters are substantial legal questions that require careful judicial review.
Human Impact and Broader Implications
The legal proceedings affect approximately 7.8 million depositors and around 6,450 employees across 281 branches. Union Bank is identified as a systemically important institution experiencing significant financial distress, which, according to its own affidavit, necessitates reliance on CBN’s regulatory forbearance for its continued operations.
Critics of the CBN’s actions suggest that the dispute undermines investor confidence. However, broader evidence indicates a robust banking environment. By April 2026, thirty-three Nigerian banks had raised N4.65 trillion under the CBN’s recapitalization framework, far surpassing figures from previous years. Additionally, the Nigerian Exchange All-Share Index experienced a 29 percent increase in the first quarter of 2026, suggesting market stability rather than crisis.
The structural vulnerabilities in this case stem predominantly from the acquisition financed by borrowed funds and unhedged against currency fluctuations, not from the actions of the regulator. The CBN’s intervention aligns with typical central banking practices.
When Union Bank’s board filed its own appeal, it recognized the institution’s best interests amidst the challenges presented. Nigeria’s appellate courts are tasked with resolving these matters, rather than public discourse.
Union Bank of Nigeria, which has served nearly eight million depositors for over a century, is not in the process of dismantlement but rather undergoing stabilization under regulatory oversight, with operations and depositors’ interests preserved. In governance terms, this is an example of stewardship—an understanding that is crucial to both the institution and Nigeria’s financial landscape.
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