News Highlights:
- The Central Bank of Nigeria (CBN) has approved a crucial financial accommodation to support the merger between Unity Bank Plc and Providus Bank Limited
- The CBN has also extended a N700 billion, 20-year term loan to the new entity, with an interest rate of Monetary Policy Rate (MPR) minus 11 per cent.
The Central Bank of Nigeria (CBN) on Tuesday announced approval for a pivotal financial accommodation to support the proposed merger between Unity Bank Plc and the Providus Bank Limited.
The proposed merger will result to an asset ownership of 80-20 per cent (80 per cent Providus, 20 per cent Unity Bank).
The CBN said in a statement signed by its acting Director of Corporate Communications, Hakama Sidi-Ali, that the move is designed to bolster the stability of the nation’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 statement read.
“It is unequivocal to state that the CBN’s action is under 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.
“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 said it remains committed to safeguarding depositors’ interests and ensuring the smooth functioning of the banking sector through proactive measures and strategic interventions.
Digital TimesNG gathered that the financial accommodation included N700 billion to the new entity, structured as a 20-year term loan which will be priced at an interest rate of Monetary Policy Rate (MPR) minus 11 per cent, subject to a minimum of six per cent.
A CBN letter titled, “Request for Merger Approval and Financial Support, “addressed to Managing Director, Unity Bank Plc, dated July 22, 2024, and signed by CBN acting Director, Banking Supervision, Dr. Adetona Adedeji, stated that payments of the loan are to be made semi-annually, with a principal moratorium of five years.
The new entity will commence repayment in 15 equal installments until maturity beginning in the sixth year.
