CBN approves Providus Bank and Unity Bank merger. Per a statement by the apex on the X (formerly Twitter), the move is designed to bolster Nigeria’s financial system.
This news comes months after Providus Bank made moves to acquire a major stake in Unity Bank.
According to the CBN, it has granted “financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank Limited.”
It added that “the merger is contingent upon the financial support from the CBN. The Fund will be instrumental in addressing Unity Bank’s total obligations.”
While the merger has been approved by the apex bank. There was news that the ongoing talks between both banks is an acquisition, and not a merger.
For example, last year, Providus Bank which was founded in 2016 was making a move to acquire majority stake in publicly listed Unity Bank.
Details of this merger
Per This Day, Unity Bank has been struggling to beef up its minimum capital requirement since 2017. A source told the outlet that “Part of the deal is that Providus must have asked for the isolation of Unity Bank’s bad loans. Unity Bank which is big in agriculture financing, has been struggling for years,”
Unity Bank’s financials have been in the negative for a while now. The bank recorded a loss after tax of ₦47.917 billion in 2023, down by 2,461% from profit after tax (PAT) of ₦2.029billion in 2022.
Talks of Providus Bank to acquire the bank also made the news in April this year. The acquisition was part of ProvidusBank’s expansion plan.
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Considering the initial talks of an acquisition, it is possible that Providus Bank will be the more dominant of a merger between both banks.
However, the CBN pointed out that no Nigerian Bank “no Nigerian bank currently faces a precarious situation comparable to that of Heritage Bank, which was recently liquidated.”
While Unity Bank’s financial buoyancy might be in question. It has the 10th most branches among Nigerian commercial banks. However, more details about the bank could be revealed after the merger
