Fidelity Bank faces bankruptcy as Supreme Court orders bank to pay N225 billion damages to Nigerian firm

The ruling, delivered on April 11, 2025, capped nearly two decades of litigation stemming from a series of asset seizures and transactions initially executed by FSB International Bank prior to its consolidation into Fidelity Bank in 2005.

The apex court upheld lower court rulings that found Fidelity liable for breaching a subsisting court injunction in the sale of disputed properties to a third-party buyer, Sagecom Concept Ltd.

According to court documents and sources familiar with the matter, Fidelity had sold assets belonging to engineering firm G. Cappa Plc despite being served a federal injunction restraining the bank from doing so.

Sagecom, which acquired some of the properties for N350 million in 2006, filed suit after discovering that the transaction violated an active court order.

The Supreme Court, in its final judgement, held Fidelity accountable for deliberate disregard of judicial authority and ordered the bank to compensate Sagecom for loss of possession and economic benefits over an extended period.

A Lagos High Court subsequently assessed damages at $139,064,896.18, with the naira equivalent calculated at N225.29 billion using the official exchange rate of N1,620/$ as of May 15, 2025.

A source within Fidelity Bank’s executive management, speaking under anonymity, described the judgement as a potential existential threat. “To be honest, this is the biggest crisis the bank has ever faced,” the official said. “The obligation is simply too big.”

The management has reportedly initiated negotiations with Sagecom’s legal representatives to explore a repayment plan. However, the urgency imposed by the ruling and the scale of the liability present major hurdles to any long-term restructuring agreement.

Fidelity Bank had declared a profit before tax of N385 billion for the 2024 financial year.

However, internal sources say the reported earnings were largely driven by loan interest income that has since been rolled over, leaving insufficient liquidity to absorb the court-imposed liability.

The Central Bank of Nigeria (CBN) has not issued a formal response but is expected to monitor the situation closely. Analysts believe regulatory intervention may be necessary to prevent systemic implications for the broader financial sector.

“Fidelity Bank is a systemically important institution with a large customer base and exposure across multiple sectors,” a financial analyst familiar with the situation said. “Should the bank default on this obligation, it could trigger market contagion and investor confidence erosion.”

As of Friday, Fidelity’s share price closed at N20.80 on the Nigerian Exchange, up nearly 140 percent year-to-date. However, the Supreme Court ruling, previously unreported, could significantly alter investor sentiment once fully disclosed to the market.

Legal experts involved in the matter confirmed that the court found the bank’s conduct “egregious,” citing its violation of a clear injunction and the financial damages caused to Sagecom. The Supreme Court criticised Fidelity’s refusal to halt the sale despite having full knowledge of the restraining order.

Justice Adamu Jauro, in the lead opinion, noted, “Allowing the appellant to escape liability as it so desperately seeks to do here would be tantamount to allowing it to benefit from its own wrong.”

The justices concluded that Fidelity failed to demonstrate any miscarriage of justice in the lower courts and rejected all grounds of appeal.

The Lagos High Court, presided over by Justice Olabisi Akinlade, has scheduled a hearing for May 19 to determine final settlement conditions. The court has signalled that the exchange rate applicable at the time of payment will be used to finalise the naira value of the dollar-based judgement.

Fidelity Bank, led by Managing Director and CEO Nneka Onyeali-Ikpe, has yet to issue an official statement on the ruling. Legal representatives for the bank, including prominent senior advocates Kanu Agabi and Onyechi Ikpeazu, also declined to comment.

The case has reignited scrutiny of legacy banking practices and raised questions about corporate governance, compliance culture, and legal risk management within Nigeria’s financial services sector.