Providus Financial institution stated a merger with Unity Financial institution, which has obtained preliminary approval from the Central Financial institution, will give the post-merger entity a steadiness sheet of as much as ₦3 Trillion ($1.8 billion). Providus, which has constructed a popularity for its banking-as-a-service providing, is the more healthy of the 2 entities. 

“The proposed enterprise mixture of each establishments will create considered one of Nigeria’s main monetary establishments,” Providus Financial institution instructed clients in an e mail seen by TechCabal.

Unity Financial institution, the product of a 2006 merger between 9 banks, has struggled since 2007, racking up losses and dangerous loans. It’s going to want a mortgage from the Central Financial institution to make this merger occur. A letter seen by TechCabal confirmed it requested for a ₦700 billion mortgage. 

Regardless of its huge money owed and a historical past of distressed banks being complicated companies to purchase, Providus is seeking to broaden its retail footprint, stated one banker who requested to not be named. Unity Financial institution has 240 branches, ten instances the variety of Providus branches. 

“The enterprise mixture will be sure that Providus Financial institution has footprints in main cities round Nigeria,” Providus claimed. 

Whereas many social media commentators have questioned the deal, one finance analyst speculated that the CBN could have been unwilling to permit a second financial institution failure following the revocation of Heritage Financial institution’s licence in June 2024. 

For Unity Financial institution, it marks one other lucky escape for an establishment that has typically appeared on the brink. It missed a 2010 deadline for recapitalisation after billions in losses pushed by dangerous loans eroded shareholder capital. 

Regardless of finally elevating capital in 2011 and recovering round ₦53 billion in dangerous loans, Unity Financial institution was quickly within the purple once more. By 2018, it had collected losses of ₦338 billion and by 2023, shareholder capital was once more worn out, prompting hypothesis that its licence would even be revoked. 

Its precarious money place will make this appear to be an acquisition, however in the long run, Providus will get a companion with a retail footprint and can congratulate itself for not taking up Unity Financial institution’s liabilities within the quick time period.