The Central Bank of Nigeria (CBN), has approved Providus’ takeover of Unity Bank to prevent financial instability in northern Nigeria, according to findings.
More facts have, however, emerged as to the main reasons behind the CBN’s decision to back the take-over of Unity Bank by Providus Bank.
It was gathered that a key consideration by the apex bank was that Unity Bank remained a systematically-important bank that must not be allowed to fail in the interest of many depositors across the northern part of the country.
Sources said that the amount of depositors’ funds in the bank was not really a major concern but the fact that Unity Bank currently remained the only bank servicing many northern states and local governments.
Therefore, the central bank was of the view that if the bank was allowed to go down, many people across the north will be unbanked and will not have access to a financial services institution.
In addition, it was learnt that most of the people who borrowed money from Unity Bank are mostly farmers, thus a failure would likely have a devastating impact on the region and country’s food security initiatives.
Sources also revealed that these were the major consideration by the CBN when it approved Providus’ bid to take-over Unity Bank, adding that Providus Bank has 80 per cent of the capital injection into the new entity that would emerge from the proposed acquisition.
The CBN also recently approved another N700 billion which would also allow the apex bank to recover its support to Unity bank.
Only last week, the Nigerian banking sector landscape was shaken following the approval of the merger of Unity Bank Plc and Providus Bank Limited. The Walter Akpani-led Providus, a financial services provider licensed as a commercial bank by the CBN in January 2016 took the industry by storm.
What surprised many stakeholders was how a relatively younger Providus Bank was able to pull through such a major acquisition deal, passed the due diligence test and obtained the regulatory approval from the CBN Governor, Mr. Olayemi Cardoso.