The number of litigations claimed in monetary terms against Zenith Bank and six other lenders increased to over N4 trillion in the first half (H1) of this year, posing a significant threat to their balance sheets.
The other six banks are Sterling Financial Holdings Company, Wema Bank, FCMB Group, Guarantee Trust Holding Company (GTCO), Stanbic IBTC Holdings and United Bank for Africa.
A review of the banks’ half-year financial statements for the month ended June 30, 2025, revealed a troubling ₦4.08 trillion in financial claims against the seven banks compared to ₦3.24 trillion as of December 31, 2024.
This represents a 26.26 per cent increase in financial claims against the banks in the six months under review.
As public limited liability companies that run on investors’ funds, financial experts and shareholders are worried that when benchmarked against their half-year profits, the legal claims could pose a significant threat to the banks’ balance sheets and could erode shareholders’ funds.
A cursory examination of the financial statements painted a damning picture, as the total half-year profits from the seven banks amounted only to N1.69 trillion, showing a significant gap from the N4.08 trillion in financial claims.
READ ALSO: Zenith Bank Records 63% Surge in Dividend Payout to Shareholders
Stanbic IBTC posted a N173.43 billion profit, GTCO N449.01 billion, UBA N335.53 billion, Sterling N41.78 billion, Zenith Bank N532.18 billion, Wema Bank N87.52 billion, and FCMB N7342 billion for the period under review.
A breakdown shows that Zenith Bank led the pack with over ₦2 trillion
Zenith Bank, one of the tier-1 banks, revealed that it is presently involved in several litigation suits amounting to N2.03 trillion from N1.30 trillion as of December 31, 2024.
This represented a 56.15 per cent increase in total claims in the cases by and against the bank, which reflects how the bank had operated in the 6 months of the year.
“The actions are being contested, and the directors are of the opinion that none of the aforementioned cases is likely to have a material adverse effect on the group and are not aware of any other pending or threatened claims and litigations.
“In arriving at this conclusion, the Group has relied on evidence and recommendations from its internal litigation group and its team of external solicitors,” Zenith Bank argued.
UBA reported that it is currently involved in 1,766 legal cases, rising from the 1,703 cases in 2024.
A pan-African bank and also one of the tier-1 banks, litigation against UBA is estimated at N942 billion, declining from N1.325 trillion in 2024.
“The directors, having sought the advice of professional legal counsel, are of the opinion that no significant liability will crystallise from these cases beyond the provision made in the financial statements,” UBA stated.
Stanbic IBTC Group is exposed to various actual and potential claims, lawsuits and other proceedings that relate to alleged errors, omissions and breaches.
Its directors said they are satisfied, based on present information and the assessed probability of such existing claims crystallising, that the Group has adequate insurance cover and/or provisions in place to meet such claims.
However, Stanbic IBTC’s litigation portfolio as of June this year consists of 445 cases.
READ ALSO: FG’s Failures Fuel Insecurity, Spark US Genocide Watch — PDP Chieftain
The aggregate value of monetary claims against the Group amounts to approximately N486.009 billion. This was broken down into N482.61 billion, USD 2,267,141.61 (at an average exchange rate of N1,500/dollar), and GBP (Great British Pounds) £1,556.07 (at an average exchange rate of N2,025.14/pound).
Stanbic IBTC said it generally considered the claims against it to have a low likelihood of success, as the group is actively defending the same.
“Management believes that the ultimate resolution of any of the proceedings will not have a significant adverse effect on the Group.
“Where the Group envisages that there is a more than average chance that a claim against it will succeed, adequate provisions are made in respect of such claim,” it added.
Wema Bank disclosed that it is a party to numerous legal actions arising out of its normal business operations.
The total amount claimed against the bank is estimated at N9.32 billion in June this year from N9.622 billion in December 2024, with a counterclaim in the sum of N17.09 billion from the bank in June as compared to N16.98 billion in December.
As a result, the lender said it has provisioned N1.13 billion as of June.
Its directors believe that, based on currently available information and advice of counsel, none of the outcomes that result from such proceedings will have a material adverse effect on the financial position of the bank, either individually or in the aggregate.
On its part, GTCO is involved in 1,183 cases as a defendant, as compared to 1,051 in December 2024, and 475 as a plaintiff, relative to 466 in December.
The total amount claimed in the 1,183 cases against the Group is estimated at N476 billion and $93.2 million from N427.9 billion and $83.96 million in December 2024.
Also, the total amount claimed in the 475 cases instituted by the group is ₦333.5 billion, rising from ₦201.89 billion in December.
The bank stated, “The solicitors of the Group are of the view that the probable liability which may arise from the cases pending against the Group is not likely to exceed ₦10.03 billion (31 December 2024: ₦10.9 billion). This probable liability has been fully provided for by the Group.”
Inappropriate legal advice: other issues heighten lawsuits against banks
A legal expert, Rose Adima, had told the reporter that banks are recording higher court claims for several reasons.
She attributed the surge in court claims against the banks to the lack of appropriate legal advice that banks receive to settle legitimate customer claims.
“It is found that banks need to seek appropriate legal advice or get the wrong ones when deciding whether or not to prosecute specific customer claims. At the end of the trial, banks are made to pay higher monetary damages/compensation as atonements for their wrongs. This was the case in 2023,” Adima said.
She explained further that banks’ unbridled compliance with regulatory bodies’ demands and staff incompetence also expose them to defamation claims and breach of contractual relationships.
“In most cases, banks need to check whether the demands of regulatory agencies like the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC) comply with the law before acceding to their requests. This sometimes backfires, as customers go after the banks and the regulatory authorities.
READ ALSO: CBN Wants Instant Refund of Failed ATM Transactions to Customers
“Some incompetent bank staff have incurred liabilities for the banks due to their incompetence in handling operational matters,” she added.
Shareholders are apprehensive, suggesting out-of-court settlements
The National President of New Dimension Shareholders, Patrick Ajudua, had told reporters that shareholders are increasingly worried about the magnitude of court cases involving banks.
“Yes, litigation can arise from normal business transactions, but much depends on the bank’s ability to use out-of-court settlement if both parties agree,” he said
He believes that the implication of always resorting to court resulted from the mounting claims against the bank, which could seriously affect the shareholders’ fund.
“So, we employ the bank to always seek alternative dispute resolution to minimise the cost of litigation,” Ajudua urged.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
