The Central Bank of Nigeria (CBN) has given the go-ahead foreign crucial financial assistance to support the proposed merger between Unity Bank Plc and Providus Bank Limited.
According to a statement by the CBN’s Acting Director of Corporate Communications, Hakama Sidi, on Tuesday, the intervention aims to strengthen Nigeria’s financial system and prevent potential systemic risks.
The apex bank said the merger is dependent on the financial support provided by the CBN and the funding is expected to play a vital role in addressing Unity Bank’s total obligations to the Central Bank and other stakeholders.
The CBN says its decision aligns with the provisions of Section 42 (2) of the CBN Act, 2007.
“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,” it said.
It said the current landscape of Nigerian banks is generally stable, with no institution facing precarious situations similar to that of Heritage Bank, which was recently liquidated.
The CBN said it remains committed to safeguarding depositors’ interests and ensuring the smooth functioning of the banking sector through proactive measures and strategic interventions.
The apex bank emphasised its dedication to maintaining financial stability during this transformative period by ensuring that the merger between Unity Bank and Providus Bank proceeds smoothly and contributes positively to the overall stability of Nigeria’s banking sector.
On 29 March, the CBN announced an increase in the minimum capital requirements for banks.
Commercial banks with international licences must now maintain a capital base of N500 billion, while national and regional banks are required to have capital bases of N200 billion and N50 billion, respectively.
Also, the Nigerian Exchange Limited (NGX) recently banned Unity Bank from trading, citing its failure to meet the requirement for filing audited annual reports.
Unity Bank, which is backed by the Asset Management Corporation of Nigeria (AMCON), is the only listed bank yet to publish its 2023 earnings report. AMCON, tasked with purchasing and recovering bad loans from banks, is Unity Bank’s largest shareholder, owning over one-third of its issued shares.