The Central Bank of Nigeria (CBN) has said the proposed merger between Unity Bank and Providus Bank Limited will help avert systemic risks and boost the stability of Nigeria’s financial system.
The CBN on Tuesday, 6th August 2024, announced that it has approved what it called “a pivotal” financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank.
Join our WhatsApp ChannelIn a statement signed by Hakama Sidi Ali, Acting Director, Corporate Communications, the CBN said the merger is based on its financial support.
The statement said: “This strategic move is 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. “The fund will be instrumental in addressing Unity Bank’s total obligations to the Central Bank and other stakeholders.”
The CBN explained that the action is in line with the provisions of Section 42 (2) of the CBN Act, 2007.
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“This arrangement is crucial for the financial health and operational stability of the post-merger organization,” it further emphasised.
Justifying its intervention to support the banks in the merger, the apex bank clarified that no Nigerian bank currently faces a precarious situation that can be compared to that of Heritage Bank, that was liquidated in June this year.
The statement said “The CBN remains committed to safeguarding depositors’ interests and ensuring the smooth functioning of the banking sector through proactive measures and strategic interventions.
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“The CBN’s decision underscores its dedication to maintaining financial stability and promoting confidence in the banking system during this transformative period,” it added.
The proposed merger comes after the CBN introduced the recapitalisation policy which mandates banks under different categories of licence to raise their capital base as part efforts to boost Nigeria’s financial system stability and also facilitate the realization of the $1 trillion economy target of the federal government.
Victor Ezeja is a passionate journalist with seven years of experience writing on economy, politics and energy. He holds a Master's degree in Mass Communication.
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