Lagos, sept 2 – Shareholders of Unity Bank Plc are set to vote on a scheme of merger with Providus Bank Limited, a move that will see Providus Bank effectively take over the operations and corporate identity of Unity Bank.
A Federal High Court sitting in Lagos has directed that a meeting of Unity Bank’s shareholders be held to consider and approve the merger between the two Nigerian commercial banks.
The proposed scheme, which has already received regulatory approval from the Central Bank of Nigeria (CBN), outlines the combination of all assets, liabilities, and undertakings of Unity Bank with those of Providus Bank.
According to the scheme, if approved, Providus Bank will take full control of unity bank’s assets and the name will no longer exist. The entire share capital of Unity Bank will be cancelled, and the bank will be dissolved without winding up.
Letter from the court ruling showed that Unity Bank shareholders are presented with two options as consideration for their shares:
- A cash “payment of N3.18 for every share held in Unity Bank.”
- A share swap, where they will receive “18 ordinary shares in Providus Bank for every 17 ordinary shares they hold in Unity Bank.”
However, the merger is a significant step in Nigeria’s banking sector, particularly in light of the CBN’s recent recapitalization requirements for banks. The CBN has also provided a substantial financial accommodation to support the merger, aimed at resolving Unity Bank’s legacy obligations and ensuring the stability and sustainability of the new entity. This support includes a N700 billion, 20-year term loan.
The move to merge with Providus Bank is seen as a strategic response for Unity Bank to meet the CBN’s new capital thresholds and enhance its competitive position in the market. The combined entity is expected to have a significantly larger branch network and a more diversified portfolio of products and services, strengthening its ability to serve customers and contribute to the Nigerian economy.
