The Central Bank of Nigeria (CBN) has approved financial support to facilitate the merger between Unity Bank Plc and Providus Bank Limited. This move aims to stabilize Nigeria’s financial system and prevent potential systemic risks.
In a statement signed by Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications, the CBN confirmed the approval.
“The Central Bank of Nigeria 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,” the statement read.
The merger relies on this financial support, which is crucial for the financial health and operational stability of the newly merged entity. However, the CBN did not disclose the amount of financial support provided.
The CBN emphasized the importance of this support in addressing Unity Bank’s total obligations to the Central Bank and other stakeholders.
“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 noted.
The CBN’s action aligns with Section 42 (2) of the CBN Act, 2007.
“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 organization,” the statement added.
The CBN assured the public that no Nigerian bank currently faces a precarious situation similar 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.
This decision follows the CBN’s recent revocation of Heritage Bank Plc’s banking license due to the bank’s persistent financial instability and regulatory breaches. The CBN’s mandate is to maintain a sound financial system in Nigeria, as outlined under Section 12 of the Banks and Other Financial Institutions Act (BOFIA) 2020.
Heritage Bank failed to adhere to Section 12 (1) of BOFIA 2020, necessitating regulatory intervention. Despite multiple supervisory measures, Heritage Bank’s financial performance continued to decline, posing a significant threat to financial stability. This led to the CBN’s decision to revoke its license to reinforce public confidence in the Nigerian banking sector and ensure the integrity and soundness of the financial system.