The Central Bank of Nigeria (CBN) has officially approved the merger of Providus Bank and Unity Bank.
This significant development was confirmed in a statement released on Tuesday by Hakama Sidi, the acting Director of Corporate Communications at CBN. The decision aligns with Section 42 (2) of the CBN Act, 2007.
This merger marks the first of its kind following CBN’s directive to increase the minimum capital base for banks. Additionally, CBN announced a crucial financial support package to facilitate the merger, aiming to enhance the stability of Nigeria’s financial system and mitigate potential systemic risks.
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According to the statement, “The Central Bank of Nigeria has granted approval for a pivotal financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank Limited. This strategic move is designed to bolster the stability of Nigeria’s financial system and avert potential systemic risks.
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“The merger is contingent upon the financial support from the CBN. The fund will be instrumental in addressing Unity Bank’s total obligations to the Central Bank and other stakeholders. It is unequivocal to state that the CBN’s action is in accordance with the provisions of Section 42 (2) of the CBN Act, 2007.
“This arrangement is crucial for the financial health and operational stability of the post-merger organisation.”
Reports from The PUNCH indicate that Providus Bank has been planning to acquire a majority stake in Unity Bank for over a year as part of its expansion strategy and efforts to strengthen its capital base amidst the ongoing recapitalisation challenge.
Unity Bank, which began operations in January 2006 following the merger of nine banks specializing in investment, corporate, and retail banking, has been seeking investment to boost its capital. In 2018, a potential $1 billion investment from New York-based private equity firm Milost Global Inc. fell through, leaving the bank in search of a suitable partner.
The merger between Providus Bank and Unity Bank represents a strategic move to ensure the financial health and operational stability of the new entity, supported by CBN’s pivotal financial intervention.
More details to follow…
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