The Central Bank of Nigeria (CBN) has approved the merger between Providus Bank and Unity Bank. This decision, announced on X (formerly Twitter), aims to strengthen Nigeria’s financial system.
The approval follows recent efforts by Providus Bank to acquire a significant stake in Unity Bank. The CBN’s statement notes that “financial accommodation” has been granted to support the merger, which is crucial for addressing Unity Bank’s financial obligations.
There had been speculation that Providus Bank might acquire Unity Bank rather than merge with it. Last year, Providus Bank, which was founded in 2016, showed interest in buying a majority stake in Unity Bank. Unity Bank has faced challenges in meeting its capital requirements since 2017.
According to This Day, “Part of the deal is that Providus must have asked for the isolation of Unity Bank’s bad loans.” Unity Bank, known for its focus on agriculture financing, has struggled financially for years. It reported a loss of ₦47.917 billion after tax in 2023, a drastic drop from a profit of ₦2.029 billion in 2022.
Although Providus Bank’s plans were initially seen as an acquisition, the CBN’s approval suggests a merger. The CBN mentioned that “no Nigerian bank currently faces a precarious situation comparable to that of Heritage Bank, which was recently liquidated.”
Unity Bank, despite its financial issues, is among the top ten banks in Nigeria by the number of branches. Further details about the merger will be revealed as the process continues.
