2 Nigerian Banks to Become One, Obasanjo, 4 Other Directors To Pocket Bulk of N37bn Payout
- Unity Bank and Providus Bank Limited are set to become the latest commercial banks to merge into one
- The move, already approved by shareholders, will see Unity Bank shareholders receive N3.18 for each share held
- The Central Bank of Nigeria has also approved the merger last year, paving the way for its formal completion
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Unity Bank Plc and Providus Bank Limited have received approvals from both shareholders and the Central Bank of Nigeria (CBN) to merge.
Under the terms of the deal, shareholders offered N3.18 per Unity share or 18 Providus shares for every 17 Unity shares, more than double the bank’s last trading price of N1.51 on the Nigerian Exchange.
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The shareholders will also have the option of swapping their holdings for new shares in Providus Bank.
Why the merger between Unity Bank and Providus Bank
The CBN approved the merger last year, paving the way for its formal completion once all legal and procedural requirements are finalised.
A Federal High Court has directed that Unity Bank convene a meeting of its shareholders this month to finalise the scheme.
The move comes as Unity Bank struggles with deep financial distress.
The lender reported a net loss of N62.6 billion in 2023, with its liabilities exceeding its assets by N326.9 billion.
Auditors KPMG noted that its capital adequacy ratio was -76.14%, far below the 10% minimum required by regulators, raising doubts about its ability to continue as a going concern.
Unity Bank has 63,559 shareholders. Public sector ownership, which was once 70%, has been reduced to 8.27% as of December 2023.
Unity Bank shareholders to share N37 billion
Five directors with direct and indirect holdings in Unity Bank Plc are set to receive about 67% of a proposed N37.14 billion ($25 million) payout to shareholders as the loss-making lender prepares to merge with Providus Bank Limited, BusinessDay reports.
According to the register of members as of Dec. 31, 2023, the Asset Management Corporation of Nigeria (AMCON) is Unity Bank’s single largest shareholder with 4.0 billion units, representing 34.22%.
Pan African Capital Nominee follows with 1.48 billion shares (12.67%), Lighthouse Capital Limited holds 1.05 billion shares (9.01%), Ibad Limited owns 717.7 million shares (6.14%), while EL-Amin (Nigeria) Limited has 615.9 million shares (5.27%).
Together, the five investors control 67.31% of Unity Bank, translating to approximately N25 billion of the proposed payout if they opt for cash instead of new equity in Providus.
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Breakdown of potential payments includes:
- AMCON: N12.72 billion
- Pan African Capital: N4.7 billion
- Lighthouse Capital: N3.35 billion
- Ibad Limited (linked to Iyabo Obasanjo): N2.95 billion
- Hafiz Mohammed Bashir: N2.06 billion
- El-Amin (linked to Halima Babangida): N121.5 million
Nigerian bank shuts down, changes social media handles, offices
Earlier, Legit.ng reported that Titan Trust Bank Limited has officially changed its social media handles to Union Bank of Nigeria, formally ending its existence as a separate entity.
The decision was sealed after the Central Bank of Nigeria (CBN) finally approved its long-awaited merger.
The merger, driven by recapitalisation pressure, has positioned Union Bank among Nigeria’s top 10 banks by assets
Source: Legit.ng
