Forensic Audit Exposes Multi-Billion Naira Abuse at Union Bank Under Former Management
A comprehensive forensic investigation has revealed extensive financial mismanagement at Union Bank of Nigeria, uncovering abuses that ran into billions of naira and directly threatened the institution's viability. The detailed audit report provides fresh insights into the circumstances that necessitated the Central Bank of Nigeria's dramatic intervention in January 2024, which resulted in the removal of the bank's former directors and owners.
Systematic Financial Manipulation Uncovered
According to extracts from the forensic report, the former management engaged in multiple forms of financial misconduct that compromised the bank's integrity and stability. The investigation documented financial reporting manipulation, fraudulent misappropriation of foreign loans, unethical financial engineering, and inappropriate withdrawals of depositors' funds. These practices created a precarious financial position that raised serious concerns about the bank's solvency and long-term survival.
The $300 Million Loan Controversy
The forensic audit identified particularly troubling practices involving a substantial $300 million loan obtained from Afreximbank. Titan Trust Bank, the investment vehicle linked to the former owners that later merged with Union Bank, carried this unhedged loan without proper disclosure. The exposure was subsequently transferred into Union Bank's books, requiring further financial adjustments to conceal its significant impact on the institution's financial health.
More alarmingly, the investigation found that this same $300 million loan was deployed as part of over $490 million used to acquire shares in Union Bank itself. The responsibility for repayment was then transferred to the bank, effectively meaning that the bank's own resources were used to finance the purchase of its shares. The former owners failed to hedge against foreign exchange risks on the loan or provide for interest and fees, while retaining full ownership benefits.
Massive Financial Consequences
The financial engineering had severe consequences for Union Bank's balance sheet. By the third quarter of 2025, the bank faced a revaluation loss of approximately N396 billion, with additional interest and fees exceeding N147 billion. These massive losses significantly eroded the bank's capital base and threatened its ability to meet regulatory requirements.
Diversion of Foreign Loans and Inappropriate Withdrawals
Further findings from the forensic report revealed that foreign loans sourced from offshore lenders were systematically diverted from their intended purposes. Funds meant for on-lending to customers were instead redirected into multi-million dollar swap transactions with the Central Bank of Nigeria, without disclosing the original purpose of the funds. False reports were subsequently submitted to the offshore lenders to conceal these diversions.
The investigation also uncovered multiple inappropriate withdrawals from depositors' and lenders' funds. In one particularly egregious case, approximately $58 million was withdrawn to settle obligations tied to the undisclosed Afreximbank loan. Total inappropriate withdrawals exceeded $100 million, significantly worsening the bank's currency liquidity position and further destabilizing its operations.
Regulatory Intervention Prevents Collapse
A forensic analyst familiar with the report emphasized that the banking regulator's intervention prevented a potential collapse of Union Bank and wider disruption in Nigeria's financial system. The analyst noted that the Central Bank's action provided a "soft window" for the bank to stabilize operations under new leadership, avoiding more severe consequences for depositors and the broader economy.
Recovery and Regulatory Response
Subsequent corrective measures have improved Union Bank's financial position, with the institution regaining market share and meeting its obligations. By the third quarter of 2025, the lender had begun a recovery process, with expectations that it could meet the N200 billion capital requirement needed to retain its national banking license.
In a statement on March 25, 2026, following a Federal High Court judgment in Lagos, the Central Bank of Nigeria confirmed it was reviewing the Certified True Copy of the ruling but maintained that Union Bank's status remained unchanged under its intervention. "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 apex bank stated.
The Central Bank added that it would continue to provide regulatory oversight to ensure Union Bank operates safely and stably while sustaining public confidence in Nigeria's financial system. The regulator also indicated that a limited number of financial institutions remain under regulatory and judicial processes, even as it confirmed the successful recapitalization of 33 banks.
"All banks remain fully operational, ensuring continued access to banking services for customers," the CBN emphasized, seeking to calm concerns over institutions undergoing regulatory intervention while maintaining stability in the banking sector.
