The Central Bank of Nigeria (CBN) has approved the merger of Providus Bank and Unity Bank.
The apex bank, in a statement signed by the acting Director, Corporate Communications, Hakama Sidi, on Tuesday, said that the action is in accordance with the provisions of Section 42 (2) of the CBN Act, 2007.
The development signals the first merger to be approved following a mandate by the apex bank to increase its minimum capital base
The apex bank also announced approval of 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 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.”
Recall 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 Providus Bank’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.
