Unity, Providus’ Marriage Gets Financial Support

With the deadline for recapitalising industry still more than one and a half year away, banks have begun making moves with the first merger already underway. Although the talks had commenced since last year, Unity Bank Plc and Providus Bank Limited now have the backing of the Central Bank of Nigeria (CBN).
The CBN last week Tuesday had given approval for the financial support for the merger of the two banks. ia statement signed by the acting director, Corporate Communications of the apex bank Mrs Hakama Sidi Alli, the approval of the financial accomodation for the merger is a strategic move designed to bolster the stability of Nigeria’s financial system and avert potential systemic risks. The merger is contingent upon the financial support from the CBN.
According to the apex bank, 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. Furthermore, 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 remains 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 financial support being grated by the CBN towards the merger is a N700 billion 20-year loan which will have an interest rate of Monetary Policy Rate (MPR) minus 11 per cent, with a minimum rate of six per cent.
The 20-year term loan designed to ensure the operational stability of the merged entity. When banks merge, financial accommodation is often required to facilitate a smooth transition. The support ensures that the merged entity meets regulatory capital requirements, which might involve raising additional capital or adjusting existing capital structures.
Asides this, the support provides liquidity to ensure the merged bank can meet its short-term obligations and maintain customer confidence, and also covers costs associated with integrating systems, processes, and staff. This includes IT system upgrades, staff training, and harmonising operational procedures.
Financial accommodation for a bank merger is crucial for maintaining stability, ensuring compliance, and realising the anticipated synergies and efficiencies from the merger. Meanwhile, a joint statement signed by the management of Unity and Providus Bank said the proposed merger represents a strategic and complementary union that will leverage the strengths of both banks to create a leading financial institution in the industry with footprints in retail, corporate, commercial, and digital banking.
Describing the merger as a milestone, the statement read, “Our customers will benefit from an expanded suite of products and services, greater convenience, and improved access to banking solutions across various channels. The integration of our digital platforms will offer enhanced security, faster transactions, and a more personalised banking experience
“Unity Bank Plc, with its rich legacy of over 18 years, has established a robust retail banking network, comprising more than 220 branches nationwide. With a strategic niche in the agricultural business, our commitment to delivering exceptional customer service and a comprehensive range of financial products has earned us the trust and loyalty of millions of customers.
“Providus Bank Limited, on the other hand, is renowned for its innovative approach to banking, boasting a strong digital footprint, innovative products, high quality service culture and strong focus on helping customers grow. As a fast-growing new-generation bank, ProvidusBank has consistently pushed the boundaries of technology to deliver cutting-edge financial solutions that cater to the evolving needs of modern consumers.
“The combination is driven by a shared vision to provide an unparalleled banking experience to our customers. By combining Unity Bank’s extensive branch network and deep-rooted customer relationships with Providus’s digital prowess and innovative spirit, we aim to deliver a seamless blend of traditional and modern banking services.
“As we embark on this journey together, we remain committed to maintaining the highest standards of corporate governance, financial stability, and customer satisfaction. Our united team of dedicated professionals will work tirelessly to ensure a smooth transition and continued tradition of excellence in all our operations.
“This combination signifies the beginning of a new chapter in our shared history, one that is filled with promise and potential. We are confident that the combined strength of both entities will create a formidable force in the banking sector, driving innovation, growth, and prosperity for our customers, employees, and stakeholders.”