ARISE business analyst, Chika Mbonu, has warned that the recent court ruling affecting Union Bank’s leadership could undermine depositor confidence and disrupt banking operations if not urgently resolved.
Speaking during an interview on ARISE News on Thursday, Mbonu said while the legal dispute between the Central Bank of Nigeria (CBN) and shareholders remains ongoing, the bigger concern lies in its potential impact on depositors and the stability of the banking system.
According to him, banking operates largely on trust, making any uncertainty around governance a significant risk.
“Banking is almost essentially a confidence game… the depositors want to make sure their money is safe,” he said.
He explained that the court decision, which challenges the CBN’s earlier intervention in the bank’s management, could create operational confusion, particularly at the decision-making level.
“There may be confusion of who can approve at the board level, who can approve transactions because of the judgment now,” he noted.
Mbonu stressed that such uncertainty, if prolonged, could slow down critical decisions within the bank and affect its day-to-day operations.
“If things are not resolved quickly… it can become a war of attrition,” he warned.
He further emphasized that depositors remain the most vulnerable stakeholders in the situation, as their funds constitute the backbone of banking operations.
“It’s not CBN money… it’s not the shareholders’ money, it’s the depositors’ money that runs the bank,” he said.
Despite the concerns, Mbonu acknowledged the reassurances issued by the Central Bank, noting that the regulator has affirmed the bank’s stability and ability to meet its obligations.
“The Central Bank has assured that Union Bank is safe… and meets its ordinary day-to-day obligations,” he said.
However, he cautioned that continued disputes could erode public confidence and potentially trigger panic withdrawals if not carefully managed.
“If depositors feel uncomfortable… they may have a run on the bank, and that’s what we’re all trying to avoid,” he added.
Mbonu also described the ruling as a setback for the CBN, urging the regulator to strengthen its legal processes in future interventions.
“For the CBN, I think it’s a major setback… they have to make sure they dot all the ‘i’s and cross all the ‘t’s,” he said.
He concluded by calling for swift resolution of the dispute, either through legal clarification or mutual settlement, to safeguard depositor trust and maintain stability in the banking system.
Triumph Ojo
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