The Central Bank of Nigeria (CBN) has formally approved the merger between Providus Bank and Unity Bank, as disclosed in a statement issued by Hakama Sidi, Acting Director of Corporate Communications, on Tuesday.
This approval is in accordance with the provisions of Section 42 (2) of the CBN Act, 2007, and marks the first merger to be sanctioned following the CBN’s recent directive to increase the minimum capital base for banks.
In addition to the merger approval, the CBN has also provided a substantial financial accommodation to support the consolidation of Unity Bank Plc and Providus Bank Limited.
This strategic initiative is designed to strengthen the stability of Nigeria’s financial system, mitigate potential systemic risks, and foster a more robust and resilient banking sector.
The statement read, “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.
“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.”
It was gathered that there have been strong indications for over a year on plans by Providus Bank Limited to acquire a majority stake in Unity Bank Plc.
The development was part of ProvidusBank’s expansion plan and, importantly, a bold initiative to shore up its capital base further amid the current recapitalisation challenge.
In 2018, Milost Global Inc., a New York-based private equity firm, botched a move to invest $1bn in the bank. Since then, the bank has been seeking a preferred suitor.
Unity Bank commenced operations in January 2006, following the merger of nine banks with competencies in investment, corporate, and retail banking.
