Union Bank Case About Stabilisation, Not Seizure — Analyst

Union Bank Case About Stabilisation, Not Seizure — Analyst

A financial and governance analyst, Bala Rabiu, has defended the intervention of the Central Bank of Nigeria in the affairs of Union Bank of Nigeria, describing the action as a legitimate regulatory effort aimed at stabilising the 109-year-old financial institution rather than an attempt to dismantle it.

In a detailed commentary titled “Stewardship, Not Seizure: What the Union Bank Case Is Really About,” Rabiu argued that much of the public discourse surrounding the ongoing legal dispute has focused excessively on procedural issues while overlooking the broader financial and regulatory realities that led to the intervention.

According to him, the controversy stems from the 2022 acquisition of approximately 94 per cent of Union Bank by Titan Trust Bank Limited through Dubai-based entities linked to the Tropical General Investments (TGI) Group.

He explained that the transaction, reportedly valued at about $300 million, was financed mainly through a facility from African Export-Import Bank, adding that the CBN’s regulatory framework prohibits the use of borrowed funds for the acquisition of shares in licensed financial institutions.

Rabiu stated that a forensic audit later revealed that the acquisition loan was ultimately reflected in Union Bank’s own books without adequate hedging against exchange-rate volatility.

According to him, the situation worsened as the naira depreciated, leading to mounting revaluation losses, deterioration in the bank’s capital adequacy ratio, increased non-performing loans, and a significant capital shortfall.

He further disclosed that a special examination was conducted and its findings presented to the bank’s former Managing Director, Mudassir Amray, and the board chaired by Farouk Gumel before the CBN dissolved the board.

“The claim that the CBN acted without evidence before dissolving the board is, on the record, simply not accurate,” Rabiu stated.

He noted that the apex bank relied on provisions of Section 34 of the Banks and Other Financial Institutions Act (BOFIA) 2020 and Section 52 of the CBN Act 2007 in taking its action.

Rabiu also pointed out that both the CBN and Union Bank have appealed the ruling of the Federal High Court, which questioned aspects of the intervention.

According to him, Union Bank’s Notice of Appeal challenged the judgment on several grounds, including the legal standing of the respondents and the timeline within which the suit was filed.

He argued that the recapitalisation exercise supervised by the CBN under Section 9 of BOFIA could not reasonably be interpreted as evidence of regulatory bad faith.

The analyst stressed that the real concern should be the protection of depositors and the stability of the banking system.

He said Union Bank currently serves about 7.8 million depositors and employs roughly 6,450 staff across 281 branches nationwide.

Rabiu noted that the bank itself acknowledged in court filings that it remained reliant on CBN forbearance, a situation he said reinforced the justification for regulatory intervention.

Addressing concerns about investor confidence, he maintained that available market indicators do not support claims of a systemic crisis.

He cited the banking sector recapitalisation drive, which reportedly saw 33 Nigerian banks raise about N4.65 trillion by April 2026, as evidence of sustained investor confidence in the country’s financial system.

He added that the Nigerian Exchange All-Share Index recorded significant growth in the first quarter of 2026, reflecting what he described as market confidence in the regulator’s commitment to financial stability.

Rabiu concluded that the core issue originated from a debt-funded acquisition structure that exposed Union Bank to exchange-rate risks and weakened its balance sheet.

He insisted that the ongoing legal process should be allowed to run its course at the appellate courts, stressing that the institution remains operational under active regulatory supervision with depositors’ funds protected.