The Central Bank of Nigeria has sanctioned the merger between Providus Bank and Unity Bank.

In a statement released on Tuesday and signed by the acting Director of Corporate Communications, Hakama Sidi, the apex bank indicated that this decision aligns with the stipulations of Section 42 (2) of the CBN Act, 2007.

This marks the first merger to receive approval following the central bank's directive aimed at enhancing the minimum capital requirements.

Additionally, the apex bank has authorized a significant financial support package to facilitate the merger between Unity Bank Plc and Providus Bank Limited. This strategic initiative is intended to strengthen the stability of Nigeria's financial sector and mitigate potential systemic risks.

The statement emphasized, “The Central Bank of Nigeria has granted approval for a pivotal financial accommodation to support the proposed merger between Unity Bank Plc and Providus Bank Limited.

This strategic move is designed to bolster the stability of Nigeria’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.

It is unequivocal to state that the CBN’s action is in accordance with 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 organization.”

For over a year, there have been strong indications regarding Providus Bank Limited's intention to acquire a majority stake in Unity Bank Plc.

This development is part of Providus Bank's expansion strategy and represents a significant effort to enhance its capital base amid ongoing recapitalization challenges.

In 2018, Milost Global Inc., a private equity firm based in New York, attempted to invest $1 billion in the bank, but the effort was unsuccessful.

Since that time, the bank has been actively seeking a suitable partner.

Unity Bank began its operations in January 2006, as a result of the merger of nine banks that specialized in investment, corporate, and retail banking.