The Central Bank of Nigeria (CBN) has officially approved the merger of Providus Bank and Unity Bank, marking a significant milestone in the Nigerian banking sector.
In a statement released on Tuesday, Hakama Sidi, the acting Director of Corporate Communications, confirmed that the approval aligns with Section 42 (2) of the CBN Act, 2007. This merger is the first of its kind following the CBN’s directive to strengthen the capital base of Nigerian banks.
The CBN also announced a crucial financial support package to facilitate the merger. This strategic move aims to enhance the stability of Nigeria’s financial system and mitigate potential systemic risks.
“The Central Bank of Nigeria has approved 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 financial support from the CBN will be instrumental in addressing Unity Bank’s obligations to the Central Bank and other stakeholders. This measure is essential for ensuring the financial health and operational stability of the merged entity.
Providus Bank has been planning to acquire a majority stake in Unity Bank for over a year. This development is part of Providus Bank’s broader expansion strategy and a bold initiative to bolster its capital base amidst current recapitalization challenges.
In 2018, a $1 billion investment proposal from New York-based private equity firm Milost Global Inc. fell through, leaving Unity Bank seeking a viable partner.
The approval of this merger marks a new chapter for both banks.
Unity Bank began operations in January 2006, following the merger of nine banks specializing in investment, corporate, and retail banking.
