Unity Bank and Providus Bank Explore “Business Combination” Talks in Nigerian Banking Scene

Unity Bank, a publicly listed financial institution in Nigeria, is presently engaged in discussions with Providus Bank regarding a potential business combination, according to sources familiar with the matter who spoke to Infostride News. These discussions, ongoing for several weeks, are currently in the exploratory stages, though opinions differ on their progress, with some suggesting advanced stages, introducing an element of uncertainty.

Sources within Providus Bank go as far as characterizing the talks as an “acquisition” of Unity Bank, implying a more definitive direction for the negotiations. It’s important to note that while discussions are ongoing, formal approval from the central bank is still pending.

Both Unity Bank and Providus Bank perceive a business combination as mutually beneficial, given their distinct business models. Unity Bank, with its expansive bank spread and balance sheet, contrasts with Providus Bank, known for its modernity, agility, and financial stability.

Unity Bank’s share price has exhibited significant fluctuations this year, driven by investor anticipation of a potential takeover or purchase of the bank. This isn’t the first time the bank has been associated with such speculation, having faced a failed acquisition bid by Miloist Global in the past.

Recently, Unity Bank released its 2023 9-month results, reporting a loss before tax of N47.9 billion. The bank also carries a negative equity of N190.2 billion, indicating potential insolvency. This raises the possibility that in the event of a business combination, Unity Bank’s shareholders might find themselves in a less advantageous position in the new entity.

In contrast, Providus Bank reported a net asset of N45.2 billion, based on its 2022 audited financial statements, suggesting a stronger financial position. Regarding balance sheet size, Unity Bank’s balance sheet stands at N423.3 billion, while Providus Bank boasts a larger N735.8 billion balance sheet. Providus Bank also maintains customer deposits of N504 billion, compared to Unity Bank’s N434 billion.

As of now, the Nigerian Exchange Group (NGX) has not received official notification of any business combination. Consequently, no press release has been published on the NGX, as typically required for listed companies. Unity Bank, a publicly listed entity, closed trading at N1.07 per share. The bank’s share price witnessed a 9% increase on Wednesday and has shown an impressive 122% growth over the past year.