CBN approves ‘N700bn financial support’ for Unity, Providus banks merger

The Central Bank of Nigeria (CBN) has granted approval for a pivotal financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank Ltd.

According to a statement by CBN’s Acting Director, Corporate Communications Department, Mrs Hakama Sidi-Ali, this strategic move is designed to bolster the stability of Nigeria’s financial system and avert potential systemic risks.

While the CBN has not disclosed how much it provided in support, a source close to the situation told TechCabal that the amount was ?700 billion.

According to a letter from Unity Bank’s managing director to the CBN seen by TechCabal, on July 22, the bank requested “merger approval and financial” support.

In that letter, it asked for a loan “priced at an interest rate of MPR minus 11%, subject to a minimum of 6%. Beginning in the sixth year, the new financial entity will recommence repayment in 15 equal installments until maturity.”

Sidi-Ali said that the merger was 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,” she said.

She said that it was important to emphasise that no Nigerian bank currently faced a precarious
situation comparable to that of Heritage Bank, which was recently liquidated.

She said that the apex bank remained committed to safeguarding depositors’ interests and ensuring the smooth functioning of the banking sector through proactive measures and strategic interventions.

“The CBN’s decision underscores its dedication to maintaining financial stability and promoting confidence in the banking system during this transformative period,” the director said.