The Central Bank of Nigeria (CBN) has granted a N700 billion financial package to support the proposed merger between Unity Bank Plc and Providus Bank Limited. According to a CBN letter dated July 22, 2024, the loan will be repaid semi-annually over 20 years, with a five-year principal moratorium. The CBN aims to reinforce the stability of Nigeria’s financial system through this bailout.
The loan terms include an interest rate of MPR minus 11%, with a minimum of 6%. Unity Bank must settle existing obligations totaling N303.7 billion from the bailout funds. These obligations include:
<span;>- N92 billion First Bank of Nigeria exposure on clearing obligation
<span;>- N51.7 billion financial accommodation from the CBN
<span;>- N25 billion under the anchor borrowers programme initiative
<span;>- N135 billion obligation to the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL)
The remaining balance of N396.30 billion from the bailout facility will be invested in a 20-year federal government of Nigeria (FGN) bond. The CBN approved the merger on August 7 and announced the financial accommodation to support the merger. This move follows the CBN’s recent review of minimum capital requirements for commercial, merchant, and non-interest banks.
