The Central Bank of Nigeria (CBN) has endorsed Providus Bank’s acquisition of Unity Bank, a strategic decision aimed at preserving financial stability in northern Nigeria, according to reports.
Insiders close to the deal revealed that the CBN’s decision was largely influenced by the crucial role Unity Bank plays in delivering banking services across the northern states, where it is often the only banking institution available in many areas.
A report by ThisDay, citing sources, indicated that the CBN was less concerned about the amount of depositors’ funds at Unity Bank and more focused on the bank’s geographic importance. Unity Bank is a vital financial lifeline for numerous communities in the north, many of which would be left without access to essential financial services if the bank were to collapse. The bank’s clientele largely consists of farmers, and its failure could have endangered both regional food security and the federal government’s agricultural programs.
Moreover, the report highlighted that Providus Bank’s financial stability was a key factor in the CBN’s approval of the acquisition. Providus Bank has pledged to contribute 80 percent of the capital needed to rejuvenate Unity Bank, with an initial N75 billion already allocated for the acquisition. This capital injection, along with Providus Bank’s strong management, is expected to restore Unity Bank to a stable financial condition.
On a broader scale, the merger is viewed as a strategic effort to maintain the availability of banking services in northern Nigeria. A source familiar with the CBN’s discussions noted that the central bank was clear that allowing Unity Bank to fail would leave many people without banking services or access to financial resources, according to the report.
