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By Geoff Iyatse
07 August 2024 | 6:54 am
The Central Bank of Nigeria (CBN), yesterday, extended a financial lifeline to struggling Unity Bank Plc and gave clearance for its planned merger with Providus Bank Limited in what is seen as a potential end to end of months of apprehension over the fate of the lender. The approval came after months of speculation on…
The Central Bank of Nigeria (CBN), yesterday, extended a financial lifeline to struggling Unity Bank Plc and gave clearance for its planned merger with Providus Bank Limited in what is seen as a potential end to end of months of apprehension over the fate of the lender. The approval came after months of speculation on the deteriorating financial health of the Unity, the prospect of a merger and the possibility of liquidation.
The regulatory clearance hit the market on the backdrop of a struggle by even the big banks to beef up their capital base. The Guardian reported that the seeming dumping of risky assets globally amid renewed apprehension posed a considerable risk to the recapitalisation drive, which is expected to mope up about N4 billion from the illiquid market.
The apex bank, in a statement signed by the Acting Director of Corporate Communications Hakama Sidi Ali, said it has “granted approval for a pivotal financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank”. It added that the strategic move was 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 otherstakeholders.
“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,” a statement by the bank noted. It insisted 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,” it stated.
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The Central Bank of Nigeria (CBN), yesterday, extended a financial lifeline to struggling Unity Bank Plc and gave clearance for its planned merger with Providus Bank Limited in what is seen as a potential end to end of months of apprehension over the fate of the lender. The approval came after months of speculation on…
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