IN a bold move that ensures that commercial banks have acceptable financial risk exposure status, the Central Bank of Nigeria has approved the merger of Providus Bank and Unity Bank.
The apex bank, in a statement signed by the acting Director of Corporate Communications, Hakama Sidi, on Tuesday, August 6, said the action is by the provisions of Section 42 (2) of the CBN Act, 2007.
Economic watchers are of the view that this kind of merger is expected as most Deposit Money Banks (DMB) are in a last-ditch effort to ensure that their banks have the right risk exposure to businesses with many of them in the capital market to raise funds for that support.
The apex bank also announced approval of a pivotal financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank Limited.
The apex bank’s statement notes that the merger is contingent upon 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.
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Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.