Providus Bank and Unity Bank merger intensifies competition and offers a positive outlook for minority shareholders and the Nigerian banking industry

Stakeholders have praised the recent merger between Providus Bank and Unity Bank as a significant development set to intensify competition in Nigeria’s banking sector while providing better outcomes for minority shareholders.

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The merger was ratified at a court-ordered meeting in Abeokuta, Ogun State, where shareholders of Unity Bank overwhelmingly approved the deal.

Following the approval, the Nigerian Exchange Limited lifted the suspension on trading of Unity Bank’s shares, allowing the Asset Management Corporation of Nigeria to sell its 34 percent stake to an existing shareholder.

Ayotunde Olubunmi, Head of Financial Institutions at Agusto & Co, said the merger resolves Unity Bank’s capital challenges while expanding Providus Bank’s footprint, especially in northern Nigeria where Unity Bank is prominent.

He added that the merger will increase competitiveness in the banking industry.

It is anticipated that the Central Bank of Nigeria may grant Providus Bank some flexibility to meet the ₦200 billion capital requirement for national banks.

The CBN had earlier approved ₦700 billion in financial support for the merged entity, structured as a 20-year loan with a five-year moratorium.

David Adonri, Vice Chairman of Highcap Securities, described the merger as a lifeline for Unity Bank and a positive step toward creating stronger banks in Nigeria.

He also raised questions about whether Providus Bank will list on the stock market as a replacement for Unity Bank.

Innocent Okwuosa, president of the Institute of Chartered Accountants of Nigeria, highlighted that the merger will improve the merged bank’s resilience and ability to contribute to economic growth.

Minority shareholders, represented by Ayoola Gilbert of the Ibadan Zone Shareholders Association, welcomed the merger as a relief compared to possible liquidation, calling for transparent communication during the integration process.

At the meeting, 99.32 percent of shareholders voted in favour of the merger terms, with options for cash payments or share allotment in Providus Bank.

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The Providus Bank and Unity Bank merger is a significant milestone for Nigeria’s banking sector, promising stronger institutions and increased competition.