The Central Bank of Nigeria has given the green light for the merger of Providus Bank and Unity Bank.
This decision, announced on Tuesday, August 6, 2024, is the first merger to be approved under the CBN’s new mandate to increase the minimum capital base for banks.
According to a statement signed by Hakama Sidi, acting Director of Corporate Communications at the CBN, the merger is in line with Section 42 (2) of the CBN Act, 2007.
The CBN has also approved crucial financial support to help facilitate the merger. This financial backing is intended to strengthen Nigeria’s financial system and prevent any potential risks.
The statement said, “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.”
It continued, “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 indicate that Providus Bank Limited has been planning to acquire a majority stake in Unity Bank Plc for over a year.
This merger is part of Providus Bank’s strategy to expand and strengthen its capital base amidst ongoing recapitalisation challenges.
In 2018, Milost Global Inc., a private equity firm from New York, attempted to invest $1 billion in Unity Bank but the deal fell through. Since then, Unity Bank has been looking for a suitable partner.
Unity Bank began operations in January 2006, following the merger of nine banks with expertise in investment, corporate, and retail banking.
