The Central Bank of Nigeria (CBN) on Tuesday announced the approval for a pivotal financial accommodation to support the proposed merger between Unity Bank Plc and the Providus Bank Limited.
The apex bank, in a statement by its acting Director of Corporate Communications, Hakama Sidi-Ali, said the move is designed to bolster the stability of the nation’s financial system and avert potential systemic risks.
“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,” the statement read.
“It is unequivocal to state that the CBN’s action is under 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 is important to emphasise that no Nigerian bank currently faces a precarious situation comparable 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.
Unity Bank a mid-tier Nigerian lender saw its woes deepen in the first six months (H1) of 2023, as it recorded a massive loss of N38.86 billion for the period.
The bank is also technically insolvent as it had negative shareholder funds or total equity of –N178.82 billion as at June 2023.
While gross revenues of N27.75 billion were flat compared to 2022 levels, Unity Bank was hit by higher interest expense and humongous Foreign Exchange (FX) revaluation loss of N35.4 billion.
The bank is yet to report its Full year 2023 earnings results.
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