Why the Supreme Court Just Gave Fidelity Bank a Lifeline in the Sagecom Loan Dispute

When Nigeria’s Supreme Court ruled in April 2025 that Fidelity Bank should pay more than ₦225 billion in a long-running loan dispute, the decision sent shockwaves through the banking sector. The amount was so large that Fidelity later admitted it could threaten the bank’s survival.

Now, eight months later, the apex court has significantly reduced the financial weight of that judgment, easing Fidelity Bank’s liability while still holding it accountable. Here’s what changed, and why it matters.

A dispute rooted in early 2000s banking deals

The case traces back over two decades to loans obtained by construction firm G. Cappa Plc from FSB International Bank in the early 2000s. The facilities, valued at $3 million and ₦100 million, were issued at steep interest rates and secured with properties in Ikoyi and Ibadan.

In 2005, Fidelity Bank acquired FSB International Bank during Nigeria’s banking consolidation, inheriting both its assets and liabilities. When G. Cappa allegedly defaulted, Fidelity moved to seize the collateral properties, triggering a legal battle that would drag on for years and eventually involve Sagecom Concepts Limited.

The April 2025 ruling that shook Fidelity

In April 2025, the Supreme Court ruled overwhelmingly against Fidelity Bank, affirming a judgment that imposed daily compounded interest at 19.5% on the loan obligations. The ruling pushed Fidelity’s total liability beyond ₦225 billion, a figure that rapidly escalated due to compounding.

By May, Fidelity publicly acknowledged that the judgment posed a serious risk of insolvency, raising concerns about systemic implications for Nigeria’s financial sector.

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Rather than challenging the judgment outright, Fidelity returned to the Supreme Court in October with a request for clarification and consequential orders. The bank asked the court to:

• Allow payment in naira, not foreign currency
• Replace daily compounded interest with annual interest
• Apply the exchange rate at the time of the High Court judgment, not the current rate
• Fix the judgment sum at about ₦30.1 billion

What the Supreme Court changed, and what it didn’t

In its latest ruling, delivered by Justice Adamu Jauro, the Supreme Court granted three of Fidelity’s requests:

• The judgment debt will be paid in naira
• Interest will accrue at 19.5% per annum, not compounded daily
• The applicable exchange rate is that of the High Court judgment date

However, the court rejected Fidelity’s request to fix the debt at ₦30.1 billion, leaving the final amount open, though far lower than the previously feared ₦225 billion-plus outcome.

Why this ruling matters beyond Fidelity Bank

The decision significantly reduces Fidelity Bank’s financial exposure, easing fears of a bank collapse. But its implications extend further.

First, it signals judicial caution around punitive interest calculations, especially in cases where compounding can inflate debts beyond their original commercial intent. Second, it offers clarity on how legacy liabilities from bank mergers should be treated decades later. Finally, it reassures regulators and investors that courts may balance creditor rights with financial system stability.

Fidelity Bank did not escape liability, but it escaped a potentially existential threat. The Supreme Court’s latest ruling recalibrates punishment without erasing responsibility, turning what looked like a financial death sentence into a survivable obligation.

In a banking system still sensitive to shocks, that distinction matters.