Unity bank merges with Providus bank
Mrs. Hakama Sidi Ali, the bank’s spokesperson, gave the indication in Abuja Friday night.
Mrs. Sidi Ali’s stated in the announcement: “The Central Bank of Nigeria (CBN) has approved a critical budgetary allowance to support the proposed merger between Unity Bank Plc and Providus Bank Limited.”
“This strategic measure aims to strengthen Nigeria’s financial system and mitigate potential systemic threats.
The merger is dependent on financial help from the CBN. The fund will help Unity Bank meet its overall obligations to the Central Bank and other stakeholders.
“It is obvious that the CBN’s action is consistent with the terms of Section 42 (2) of the CBN Act of 2007. This arrangement is critical to the organization’s financial health and operational stability following the merger.
“Furthermore, it is vital to note that no Nigerian bank is currently in a hazardous situation comparable to Heritage Bank, which was recently liquidated.
“The CBN is nevertheless committed to protecting depositors’ interests and ensuring the smooth operation of the banking sector by proactive and targeted initiatives.
“The CBN’s decision underscores its dedication to maintaining financial stability and promoting confidence in the banking system during this transformative period.”
The letter, which was addressed to Unity Bank’s Managing Director, describes a 20-year term loan intended to secure the operational stability of the amalgamated firm.
This is the first financial bailout for a commercial bank under Central Bank Governor Yemi Cardoso. It also follows the closure of Heritage Bank, which many saw as a hint that the apex would not bail out banks.
CBN Bailout Letter Details
Financial Terms and Structure.
Amount: N700 billion.
Structure: A 20-year term loan.
Interest Rate: MPR (Monetary Policy Rate) less 11%, with a minimum rate of 6%.
Repayment terms: Payments will be made semi-annually. A five-year principle moratorium, which means there will be no principal payments for the first five years. Beginning in the sixth year, the new business will repay the debt in 15 equal installments until maturity.
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