The Central Bank of Nigeria (CBN) has granted approval for financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank Limited.
This is according to a statement released by the CBN, signed by Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications.
It read: “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 Limited. This strategic move is designed to bolster the stability of Nigeria’s financial system and avert potential systemic risks.”
In the statement, the CBN noted that the merger is contingent upon this financial support, which is essential for the financial health and operational stability of the post-merger organization.
However, the apex bank failed to disclose the amount of financial support approved for the merger.
Financial support to cover Unity Bank’s total obligations
The statement noted that the financial support provided by the CBN is pivotal for addressing Unity Bank’s total obligations to the Central Bank and other stakeholders.
According to the statement, the CBN’s action aligns with the provisions of Section 42 (2) of the CBN Act, 2007.
The statement noted:
“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.”
The CBN also emphasized that no Nigerian bank currently faces a precarious situation comparable to that of Heritage Bank, which was recently liquidated.
It added that the CBN remains dedicated to safeguarding depositors’ interests and ensuring the smooth functioning of the banking sector through proactive measures and strategic interventions.
What you should know
The Central Bank of Nigeria (CBN) recently revoked the banking licence of Heritage Bank Plc with immediate effect, citing the bank’s persistent financial instability and breach of regulatory requirements.
The decision is part of the CBN’s mandate to maintain a sound financial system in Nigeria, as outlined under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
In a statement, the CBN disclosed that Heritage Bank had failed to adhere to Section 12 (1) of BOFIA 2020, which necessitated regulatory intervention.
Despite multiple supervisory measures prescribed by the CBN to mitigate the bank’s declining financial performance, Heritage Bank has been unable to improve its financial health.
The bank’s continuous underperformance poses a significant threat to financial stability, compelling the CBN to revoke its licence.
The CBN also emphasized that the action is crucial to reinforce public confidence in the Nigerian banking sector and to ensure the integrity and soundness of the financial system.