A commentary by Bala Rabiu has argued that recent criticism surrounding regulatory action at Union Bank of Nigeria presents an incomplete picture of the situation, insisting that intervention by the Central Bank of Nigeria was aimed at stabilising the institution rather than taking control of it.
The article, titled “Stewardship, Not Seizure: What the Union Bank Case Is Really About,” contends that some analyses have prematurely portrayed ongoing legal proceedings as evidence of regulatory overreach, warning that such conclusions could distort public understanding and affect confidence in the financial sector.
According to the commentary, the controversy stems from the 2022 acquisition of approximately 94 per cent of Union Bank by Titan Trust Bank Limited through Dubai-based entities reportedly linked to the TGI Group.
The transaction, valued at approximately $300 million, was said to have been financed largely through a facility from the African Export-Import Bank.
Rabiu stated that the regulatory policy of the CBN prohibits the use of borrowed funds to acquire shares in licensed financial institutions.
“That principle exists because debt-funded acquisitions hollow out the very capital base they purport to build,” he wrote.
According to the article, a forensic audit later found that the Afreximbank facility had ultimately been reflected in Union Bank’s own books without currency hedging arrangements in place.
As the naira weakened, the commentary claimed that the bank experienced increasing revaluation losses, a deterioration in its capital adequacy ratio, rising non-performing loans, and a substantial capital shortfall.
The article further stated that findings from a special examination were presented to former Managing Director Mudassir Amray and the board previously led by Farouk Gumel.
“The claim that the CBN acted without evidence before dissolving the board is, on the record, simply not accurate,” Rabiu wrote.
On the legal dispute, the commentary said the CBN relied on provisions under the Banking and Other Financial Institutions Act (BOFIA) 2020 and the CBN Act 2007 in carrying out its actions.
It noted that both the CBN and Union Bank have appealed the Federal High Court ruling, with Union Bank challenging issues including the standing of the plaintiffs, filing timelines and interpretation of regulatory powers.
The article argued that the implications of the matter extend beyond legal arguments, pointing to Union Bank’s nearly 7.8 million depositors and approximately 6,450 employees across 281 branches.
“Union Bank’s own affidavit describes it as a systemically important institution in a precarious financial situation, continuing to rely on CBN forbearance for its existence,” the commentary stated.
Rabiu also rejected suggestions that the case had weakened investor confidence in Nigeria’s banking sector, citing recent capital raising activities and stock market performance as evidence of sustained market confidence.
“The market has read the CBN’s resolve as stability, not recklessness,” he wrote.
Concluding the piece, the author maintained that the institution was undergoing regulatory stabilisation rather than dismantlement.
“Union Bank of Nigeria is a 109-year-old institution serving nearly eight million depositors. It is not being dismantled. It is being stabilised under active regulatory supervision, with operations intact and depositors protected,” the commentary said.
