The financial stability of Union Bank of Nigeria (UBN) is at risk, as the company faces a lawsuit that could result in the commercial bank losing more than half of its total company assets.
Ripples Nigeria gathered from a statement obtained from the firm’s financial records for 2022, released on Wednesday, that Union Bank is facing legal actions worth N1.497 trillion.
Out of the total legal claims filed against Union Bank is N1.495 trillion from a single case, which is 53.2 per cent of the company’s N2.79 trillion total assets.
The lawsuit could reduce Union Bank’s total assets to N1.30 trillion, rendering its capital base weak. Already, the Federal High Court has awarded N1.495 trillion to the claimant against the firm.
However, Union Bank is contesting the judgement in the Supreme Court to avoid payment of the lawsuit which could destabilise the firm financially.
The statement reads: “The Bank is involved in various legal actions in the ordinary course of business, which has resulted in contingent liabilities amounting to N1.497 trillion of 31 December 2022 (2021: N1.98 trillion).
“The most significant is a case with total claim of N1.495 trillion (2021: N1.54 trillion) in which judgement had been awarded against the Bank and other co-defendants by a Federal High Court in pr years.
“The Bank appealed against the judgement which is currently pending before the supreme court. In the case of Petro Union, while the Bank’s appeal was pending before the Supreme Court, its application for leave to amend its notice of appeal, to appeal on grounds of mixed law and fact, and to extend the time to apply for leave was dismissed.
“The Bank subsequently filed another application seeking the leave of the Supreme Court to appeal the judgement of the lower court. On 22 December 2021, the Supreme Court unanimously granted leave to the Bank to appeal the judgement of the Court Appeal and to file its Notice of Appeal.
“The Bank filed an appeal on the 5 May 2022, but the Court is yet fixed a date for hearing after initial adjournment.
“This matter was considered to be a key audit matter due to the size of the potential liability and the significant judgement made by the directors in determining that no provision is required in the consolidated and separate financial statements.”
