The Central Bank of Nigeria (CBN) has given the green light for the merger between Providus Bank and Unity Bank, with the approval of the Securities and Exchange Commission (SEC) pending. This marks the first merger approved following the CBN’s directive for banks to increase their minimum capital base. Under the new recapitalization requirements, commercial banks with international authorization must increase their capital base to N500bn, national banks to N200bn, and regional banks to N50bn.
The approval was confirmed in a letter dated July 22, 2024, from Adetona Adedeji, Acting Director of the CBN’s Banking Supervision Department, to the Managing Director of Unity Bank Plc. The letter responded to a request dated June 19, 2024, seeking permission for the merger and financial support.
The CBN has also approved financial support totaling N700bn for the new entity, structured as a 20-year term loan with a 6% interest rate, to be repaid after a five-year moratorium. The letter outlined that the total obligations of Unity Bank, amounting to N303.7bn, would be deducted from the financial accommodation, and the balance would be invested in a 20-year Federal Government of Nigeria bond.
Hakama Sidi, Acting Director of Corporate Communications at CBN, stated that the approval is aimed at bolstering the stability of Nigeria’s financial system and preventing potential systemic risks, following the recent liquidation of Heritage Bank.
Providus and Unity Bank, in a joint statement, expressed their satisfaction with the approval, noting that the merger will create a leading financial institution with a strong presence in retail, corporate, commercial, and digital banking. The new entity will leverage Unity Bank’s extensive branch network and Providus’s digital capabilities to offer enhanced banking services.
The banks emphasized their commitment to maintaining high standards of corporate governance, financial stability, and customer satisfaction, promising a seamless transition and continued excellence in their operations.
