By Taofik Salako, Deputy Group Business Editor

Financial abuses and mismanagement running into many trillions of naira led to the sack of former directors and owners of Union Bank of Nigeria (UBN) and the appointment of a new board and management by the Central Bank of Nigeria (CBN).

Investigators’ report on the forensic audit of the bank obtained yesterday provided deep insight into the scenario that led to the January 2024 intervention in the first generation commercial bank.

According to the report, the former owners and directors were engaging in financial reporting manipulation, fraudulent misappropriation of foreign loans, unethical financial engineering and inappropriate withdrawal of depositors’ funds.

The report indicated that Titan Trust Bank, the investment vehicle of the former owners and directors, which was merged with Union Bank, had unhedged loan of $300 million obtained from Africa Export Import Bank (Afreximbank).

This undisclosed material item was surreptitiously passed onto the books of Union Bank, and led to several unethical financial engineering to cover up the adverse effects on the operations of the bank.

It was discovered that the former directors and owners had added the same $300 million Afreximbank loan to make up over $490 million used in acquiring shares of Union Bank and at the same time placed the burden of repayment of the foreign currency loan on Union Bank, in what amounted to using the bank’s fund to acquire its own shares.

The report indicated that the former owners and directors neither hedged against revaluation loss for the foreign currency loan nor cover interest and fees, while at the same time retaining the full ownership benefits. This unorthodox financial engineering resulted in revaluation loss of some N396 billion and interest and fees payable of more than N147 billion by third quarter 2025.

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Forensic investigators also discovered that the former owners and directors engaged in wilful diversion of foreign loans borrowed from offshore banks, illegally rerouting funds borrowed for on-lending to customers into multi-million dollar swap transactions.

Interestingly, the swap transactions were done with the apex bank without informing the regulator of the primary purpose of the offshore funds while simultaneously providing false reports to the offshore lenders.

Besides, the forensic report uncovered multi-million dollar diversion of Union Bank’s depositors and lenders’ funds. In one instance, some $58 million was withdrawn to cover maturing obligations under the undisclosed and unhedged $300 Afreximbank loan. Total inappropriate withdrawals ran over $100 million, which created foreign currency liquidity crisis for the bank.

A forensic analyst, who craved anonymity because of the sensitivity of the report, stated that the banking watchdog’s intervention saved the bank from imminent shutdown and possible negative spillovers in the financial services industry.

The intervention provided the first generation bank with a “soft window” to manage its operations while the new directors redirect the affairs of the bank.

The resultant corrective measures have seen Union Bank bouncing back, regaining more market share and redeeming maturing obligations. By third quarter 2025, the bank was already on its path to recovery following actions by the new management, with many analysts expecting it to be able to meet the N200 billion new capital requirement to retain its standalone national banking licence.

In a formal statement on judgment delivered on March 25, 2026, by the Federal High Court in Lagos concerning its regulatory action on Union Bank, the CBN stated that while it was obtaining and carefully reviewing the Certified True Copy (CTC) of the judgment, the status of Union Bank has not changed, implying that the lender remains under the CBN-intervention-management.

“As the apex regulatory authority, the CBN remains committed to acting in accordance with its mandate and established legal processes, the banking watchdog noted.

“The CBN assures the public that UBN’s status is unchanged and that it remains fully capable of meeting its obligations to customers, depositors, and all stakeholders.

“The CBN will continue to provide the necessary regulatory oversight to ensure Union Bank operates in a safe, sound, and stable manner, while maintaining public confidence in the financial system,” CBN stated.

In what appeared a reference to Union Bank and other CBN-intervention banks, the apex bank in a formal statement confirming the successful recapitalisation of 33 banks yesterday, stated that “a limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks”.

The apex banks however, assured that “all banks remain fully operational, ensuring continued access to banking services for customers”, allaying any fears over the operations of the intervention banks, which still face legal issues.

Source: The Nation News