Nigerian banks Unity Bank and Providus Bank are currently engaged in discussions about a potential business combination, according to sources familiar with the matter. The talks, in the exploratory stages for several weeks, indicate a potential “acquisition” of Unity Bank by Providus Bank, although the exact progress remains uncertain.
While the discussions are ongoing, formal approval from the central bank is still pending, adding a layer of complexity to the potential deal.
Unity Bank and Providus Bank see the business combination as mutually beneficial, leveraging their unique business models. Unity Bank, with its extensive bank spread and balance sheet, contrasts Providus Bank’s reputation for modernity, agility, and financial stability.
Unity Bank’s share price has experienced significant fluctuations this year, amid investor anticipation of a potential takeover or purchase. This isn’t the first time Unity Bank has faced acquisition speculation, having previously encountered a failed bid by Miloist Global.
In its recently released 2023 9-month results, Unity Bank reported a loss before tax of N47.9 billion, along with a negative equity of N190.2 billion, suggesting potential insolvency. This raises concerns about the advantageous position of Unity Bank’s shareholders in the event of a business combination.
In contrast, Providus Bank, based on its 2022 audited financial statements, reported a net asset of N45.2 billion, indicating a stronger financial position. In terms of balance sheet size, Unity Bank 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, and 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, witnessing a 9% increase on Wednesday and an impressive 122% growth over the past year.
