THE Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) have asked the Federal High Court in Abuja to step aside from hearing a suit filed by Aso Savings & Loans Plc and Union Homes Savings & Loans Plc over the withdrawal of their operating licences.

The matter came up on Monday before Justice Emeka Nwite, where both financial regulators raised preliminary objections and argued that the court had no legal authority to entertain the case.

The suit stems from the recent decision of the CBN to revoke the licences of the two primary mortgage banks, an action that prompted the NDIC to begin liquidation processes — a move that has heightened debate around depositor safety and regulatory compliance.

In a statement sent to Economy Post on December 16, the CBN said the two mortgage banks failed to meet the minimum paid-up share capital requirement for the category of the bank licence granted to them and also breached several directives and obligations imposed upon them by the CBN.

The CBN’s Acting Director, Corporate Communications Department, Ms Hakama Sidi Ali, said the apex bank acted in line with its mandate to promote compliance with relevant laws and regulations in the sub-sector.

READ ALSO: How Aso Savings and Loans fell into deep insolvency before CBN licence withdrawal

“As part of its efforts to re-position the mortgage sub-sector and promote a culture of compliance with relevant laws and regulations, the Central Bank of Nigeria, in exercise of the powers conferred on it under Section 12 of BOFIA 2020, and Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria has revoked the licenses of Aso Savings and Loans Plc and Union Homes Savings and Loans Plc.”

“The affected institutions had violated various Sections of BOFIA 2020 and the Revised Guidelines for Mortgage Banks in Nigeria, including:
(a) Failure to meet the minimum paid-up share capital requirement for the category of the bank licence granted to them by the CBN. (b) Having insufficient assets to meet their liabilities; (c) Being critically undercapitalised with a capital adequacy ratio below the
prudential minimum ratio as prescribed by the CBN; and (d) Failure to comply with several directives and obligations imposed upon them by the CBN.”

Regulators insist court lacks jurisdiction

Representing the CBN, Barr Onyeka Ezeah told the court that jurisdiction was fundamental and must be determined before any other issues are argued. She stressed that once the court lacked jurisdiction, the case would collapses referring to a 2022 Supreme Court ruling to support the point.

Counsel to the NDIC, Abubakar Shehu, aligned with this argument, saying the corporation was only performing its statutory role. He informed the court that the NDIC had already filed a preliminary objection and counter-affidavit, making the matter ready for hearing on that basis.

Mortgage banks seek protection from liquidation

However, counsel to Aso Savings and Union Homes, Barr Joseph Silas, maintained that the case was initially fixed for the defendants to explain why they should not be restrained from taking further steps.

He argued that, despite the licence revocation, the affected banks still had a legal right to challenge the decision within 30 days — a period during which liquidation activities should not proceed.

Mr Silas warned that allowing the NDIC to continue with the winding-up process could cause irreversible harm if the court eventually ruled against the CBN.

He therefore urged the judge to order both parties to maintain the status quo until the substantive case was decided. The CBN and NDIC opposed this, maintaining that the NDIC must step in immediately after licence revocation to safeguard depositors’ interests.

Judge prioritises jurisdictional objections

Justice Nwite questioned whether it would be appropriate to grant any restraining order while objections to the court’s competence were still pending. He noted that jurisdiction was a threshold issue and said he would avoid engaging in what might amount to an ‘exercise in futility.’

READ ALSO: CBN revokes licenses of Aso Savings, Union Homes for non-complaince with BOFIA

The case was adjourned to January 21 for hearing of the preliminary objections.

How the dispute began

Aso Savings, Union Homes and two shareholders instituted the suit after the CBN revoked the banks’ licences in December 2025. The apex bank cited persistent undercapitalisation, failure to meet minimum capital thresholds, weak asset coverage for liabilities and breaches of regulatory directives as reasons for its decision.

In their filings, the plaintiffs alleged that the CBN breached due process under the Banks and Other Financial Institutions Act (BOFIA) 2020, and accused the NDIC of moving too quickly to begin liquidation, thereby undermining their right to challenge the decision.

The CBN maintained that the revocation was carried out in accordance with Section 12 of BOFIA 2020 and Section 7.3 of the Revised Guidelines for Mortgage Banks in Nigeria.