The Court of Appeal, Ado-Ekiti Judicial Division, has held that a bank can be held vicariously liable where its employee defrauds a customer while carrying out duties connected with the bank’s business, ruling against United Bank for Africa (UBA) over the fraudulent diversion of a customer’s ₦71.6 million investment by its relationship manager.
The appellate court, in United Bank for Africa v. Engr. Adedayo Lawrence Olatunji & Anor, held that a bank cannot escape liability merely by claiming that its employee acted fraudulently or without authorisation where the wrongful conduct occurred in the course of the employee’s official dealings with a customer.
The judgment was delivered by a panel comprising Justices Omoleye, Obiorah and Inyang, JJ.CA, and was reported in the 2026 Volume 10 of the Compendium of Law Reports of Nigeria (CLRN). A summary of the decision was published on October 29, 2026, in a law digest by BusinessDay in collaboration with CLRN and ALP NG & Co.
The dispute arose from a banking relationship spanning approximately ten years between Engr. Adedayo Lawrence Olatunji and UBA, during which Omolola Toba Ayeni, an employee of the bank, served as his relationship manager.
In the course of their banker-customer relationship, Ayeni presented Olatunji with an investment proposal involving a one-year fixed deposit scheduled to commence on July 1, 2021.
Relying on the representation made by the relationship manager and the confidence he had developed through his longstanding dealings with the bank, Olatunji invested ₦71,600,000 in the proposed arrangement.
A certificate of investment was subsequently issued to him.
However, when the investment matured, neither the principal sum nor the agreed interest was paid.
Following inquiries about the unpaid investment, Olatunji was informed by UBA that Ayeni had diverted the funds.
The bank maintained that no valid fixed deposit contract had been concluded between it and the customer, arguing that the transaction was neither authorised nor undertaken on its behalf.
UBA consequently denied responsibility for the fraudulent conduct of its employee.
Dissatisfied with the bank’s position and the loss of his investment, Olatunji instituted an action against UBA and Ayeni, seeking recovery of the principal sum and other reliefs.
After considering the evidence presented by the parties, the trial court found UBA vicariously liable for the fraudulent diversion of the customer’s funds by its relationship manager.
The court consequently ordered the bank to pay Olatunji ₦71,600,000 as the principal sum, together with pre-judgment interest at 10 per cent per annum.
It also awarded ₦2,500,000 as general damages, post-judgment interest at eight per cent per annum until the judgment debt was fully liquidated, and ₦500,000 as costs.
Dissatisfied with the decision, UBA approached the Court of Appeal, challenging the finding that it was responsible for the conduct of its employee.
One of the principal issues before the appellate court was whether the trial court was right to hold the bank liable for the diversion of ₦71.6 million in the absence of conclusive documentary evidence establishing that a fixed deposit contract had been concluded between the bank and Olatunji.
The bank also questioned whether Ayeni’s conduct could properly be regarded as an act carried out in the course of her employment.
Representing UBA, W. Egert-Olusesi, Esq., alongside Favour T. Anchor, Esq., and B. I. Eniola, Esq., argued that Olatunji had signed blank cheques and handed them to Ayeni under a private arrangement between the customer and the relationship manager.
Counsel contended that the arrangement enabled the diversion of the funds and could not be attributed to the bank because the transaction was neither authorised nor conducted on UBA’s behalf.
The bank further argued that no fixed deposit contract existed between it and Olatunji in respect of the ₦71.6 million.
According to its counsel, the trial court’s award of the principal sum was perverse because there was no conclusive documentary evidence establishing the alleged fixed deposit transaction.
UBA also raised the issue of contributory negligence, maintaining that the customer exposed himself to a foreseeable risk by signing blank cheques without expressly limiting their use.
The bank submitted that the trial court should not have imposed liability on it where the customer’s own conduct allegedly created the opportunity for the fraud.
However, counsel for Olatunji, Olakanmi S. Falade, Esq., appearing with F. U. Onwere, Esq., and I. A. Ajayi, Esq., urged the appellate court to uphold the judgment.
They argued that the investment transaction arose directly from the confidence Olatunji reposed in UBA through Ayeni, whom the bank had appointed to manage his account and customer relationship.
Counsel maintained that Ayeni dealt with Olatunji in her official capacity as a relationship manager and that the transaction occurred in the course of the bank’s business.
They contended that UBA could not avoid responsibility simply by describing the investment as unauthorised or by asserting that its employee had acted fraudulently.
According to the customer’s counsel, Olatunji dealt with Ayeni as a member of UBA’s staff and not as an independent or private investment promoter.
They further disputed the bank’s arguments concerning the signing of blank cheques, maintaining that the customer’s dealings with the relationship manager were sufficiently connected with her employment to establish the bank’s liability.
After considering the submissions and circumstances of the transaction, the Court of Appeal resolved the issue in favour of Olatunji.
The appellate court held that an employer could be held vicariously liable for the wrongful acts of an employee where those acts were sufficiently connected with the employee’s duties and occurred in the course of employment.
Applying the principle to banking transactions, the court held that a financial institution could be responsible where its employee defrauded a customer while acting in a capacity connected with the bank’s business.
The court stated:
“A bank will be held vicariously liable where its employee defrauds a customer in the course of interacting with the bank. This is because the bank, as the employer and principal, is presumed to repose confidence in the employee’s competence, integrity and character by holding the employee out to customer as fit to conduct its business and manage customer relationships.”
The appellate court explained that a bank, by appointing an employee to manage customer relationships, represents that the employee is suitable to conduct its business and interact with customers on its behalf.
Consequently, where a customer deals with such an employee in the course of the banking relationship, the bank may be held responsible for wrongful conduct sufficiently connected with the employee’s assigned duties.
The court further held that the fraudulent nature of an employee’s conduct or the absence of express authorisation from the employer does not automatically absolve the employer of liability.
Rather, the relevant consideration is whether the wrongful conduct was sufficiently connected with the employee’s employment and the responsibilities entrusted to the employee.
Applying those principles to the case, the Court of Appeal found that Ayeni had dealt with Olatunji in her official capacity as UBA’s relationship manager in connection with the proposed fixed deposit investment.
The court consequently held UBA vicariously liable for her fraudulent diversion of the customer’s funds.
The decision reinforces the legal principle that banks may bear responsibility for fraudulent acts committed by employees in the course of their official dealings with customers, even where the bank disputes authorising the particular transaction.
It also establishes that the absence of a formally concluded investment contract does not, by itself, defeat a customer’s claim where the employee’s wrongful conduct is sufficiently connected with the bank’s business.
The ruling highlights the importance of the responsibilities entrusted to relationship managers and the confidence customers are entitled to place in employees presented by banks as authorised representatives.
For financial institutions, the judgment underscores the need for effective supervision of employees, particularly those responsible for managing customer accounts and presenting investment products.
For customers, it affirms that a bank’s liability for an employee’s fraudulent conduct will depend on the circumstances of the transaction, including the employee’s official role and the connection between the wrongful act and the bank’s business.
Post Title: “A Bank Will Be Held Vicariously Liable Where Its Employee Defrauds A Customer” — Court of Appeal Rules Against UBA Over ₦71.6m Investment By Naijaonpoint.