In a stunning admission of defeat, TAJ Bank Ltd has formally withdrawn its lawsuit seeking to recover a staggering N957.4 million (approx. $1.1 million USD) lost due to a massive internal system glitch, raising serious questions about its operational stability, crisis management, and the security of customer funds.
The Costly Glitch:
The crisis began in March 2025 when a severe technical failure within TAJ Bank’s systems triggered unauthorized transfers of N957.4 million. These funds flooded into accounts held at 26 different banks and fintech platforms, far beyond TAJ Bank’s immediate control. Alarmingly, this debacle occurred less than a year after a similar, albeit smaller, system failure in 2024 resulted in the erroneous transfer of **N139.6 million**.
Failed Legal Gambit:
Facing immense pressure, TAJ Bank initially sought recourse through the Federal High Court in Abuja. The bank petitioned for interim freezing orders and post-no-debit instructions against the recipient institutions to prevent the dissipation of the misdirected funds and force reversals. However, the court rejected this request, dealing a significant blow to the bank’s recovery strategy.
Surrender in Court:
Court documents reveal TAJ Bank formally discontinued its lawsuit on July 21, 2025. In a perplexing justification, the bank cited the Central Bank of Nigeria’s (CBN) 2017 Regulatory Framework for BVN Operations and Watchlist. TAJ Bank now claims this framework already empowers the 26 recipient institutions to “block, freeze, and return” the funds – essentially admitting its high-profile legal action was unnecessary from the start and shifting the onus entirely onto others to rectify its own catastrophic error.
Mounting Negative Issues Plague TAJ Bank:
This incident is not isolated but part of a worrying pattern of negative developments eroding confidence in TAJ Bank:
1. CBN Fine for Cybersecurity Lapses (May 2025): Just months before dropping its lawsuit, TAJ Bank was slapped with a hefty N200 million fine by the Central Bank of Nigeria. The penalty was imposed for “material cybersecurity deficiencies” and failure to comply with the CBN’s Risk-Based Cybersecurity Framework. This directly undermines the bank’s claims of robust systems and highlights regulatory concerns predating the latest glitch.
2. Leadership Turmoil (June 2025): The bank’s Managing Director/CEO, Mr. Hamid Joda, resigned abruptly in June 2025. While officially for “personal reasons,” industry sources reported his departure occurred amidst increased regulatory scrutiny following the March glitch and the cybersecurity fine, suggesting internal instability.
3. Declining Financial Performance (2024 Reports): TAJ Bank’s audited 2024 financial results showed a **significant 40% year-on-year decline in Profit After Tax (PAT)**. Furthermore, the bank reported a sharp increase in Non-Performing Loans (NPLs), raising concerns about its credit risk management and overall financial health even before the N957 million loss.
4. Recurring System Failures: The March 2025 N957 million glitch is the *second major technical failure* in under a year, following the N139.6 million incident. This repeated pattern points to deep-seated, unresolved vulnerabilities in the bank’s core IT infrastructure and internal controls.
Industry Reaction:
Financial analysts and customers are expressing deep concern. “TAJ Bank’s withdrawal of the lawsuit, coupled with the CBN fine and leadership exit, paints a picture of an institution in crisis management mode, not control mode,” stated Kemi Adebola, a Lagos-based banking analyst. “Abandoning the legal route to recover nearly a billion Naira lost due to *their own* system failure, while simply hoping other banks will return it, is an unprecedented abdication of responsibility. Customers must be asking if their funds are truly safe.”
Bank’s Position:
TAJ Bank has not issued a detailed public statement explaining the withdrawal beyond the court filing referencing the CBN framework. They maintain they are working with the recipient institutions for the return of the funds. However, the lack of transparency and the sequence of negative events have severely damaged trust.
Outlook:
With nearly N1 billion in customer funds still unrecovered due to its own error, a recent major regulatory fine, leadership upheaval, and declining profits, TAJ Bank faces a critical juncture. Regulators and customers alike will be demanding concrete actions to restore confidence and prevent a third, potentially fatal, system failure.
