As Unity Bank embarks on its latest journey with the merger with Providus Bank, the question on every shareholder’s mind is whether this union will be the catalyst for transformation or just another plot twist in the bank’s saga of unfulfilled potential.
To some observers, The merger between Unity Bank and Providus Bank marks a significant milestone in Nigeria’s banking sector, combining complementary strengths to create a stronger, more competitive financial institution. Unity Bank brings its extensive retail footprint of over 472 branches nationwide, strong SME banking presence, and decades-long market presence, while Providus Bank contributes innovative digital banking capabilities, niche corporate banking expertise, and a robust balance sheet with assets of N2.5 trillion.
The merged entity is poised to deliver enhanced services, expanded financial access, and cutting-edge technological offerings, positioning itself as a major player in Nigeria’s banking sector. With a seamless blend of Unity’s branch network and Providus’ digital capabilities, customers will enjoy a convenient banking experience. The merger reflects the growing trend of consolidation in Nigeria’s banking sector, enabling the combined entity to support larger transactions, drive economic growth, and contribute to the development of the financial sector
While the above optimism of those observers may be feasible,an organization’s survival and success hinge on its agility in responding to competing pressures and its ability to adapt to the ever-changing business landscape. This entails leveraging its core competencies, navigating the complex web of regulatory and governance frameworks, and meeting the expectations of powerful stakeholders, all while upholding ethical standards and cultural values.
An organization equally needs a clearly defined direction and scope over the long term, which achieves advantage for the organization through a configuration of resources within a changing environment and fulfils stakeholders’ expectations to achieve the above ;it needs that effectively addresses the organization’s strategic position, yields performance outcomes that meet expectations, and is backed by the necessary resources and competencies. Ultimately, it’s the delicate balance of these factors that determines an organization’s ability to thrive, making adaptability, strategic alignment, and resourcefulness the hallmarks of success.
In today’s fast-paced business landscape, organizations must prioritize strategic resourcing to stay ahead. This means leveraging people, information, finance, and technology in harmony. People are the heartbeat of strategy, with their knowledge and experience making or breaking success. Information processing capability can be a game-changer, improving service quality, reducing costs, and informing market knowledge. Effective financial management is also crucial, with managers needing to balance value creation, investment, and funding to drive growth. Technology is equally imperative, enabling businesses to innovate, scale, and respond to changing market demands. By integrating these elements, organizations can unlock competitive advantage, drive efficiency, and achieve sustainable success
But the fear remains the capability of the leadership of the newly created entity to create competitive values. This fear may not farfetched. Though the merger is capable of boosting its capital base, just as the starting point of successful strategies is acquiring, retaining, and developing resources of at least a threshold standard, however, possession of resources does not guarantee strategic success. This is because strategic capability is essentially concerned with how these resources are deployed, managed, controlled, and, in the case of people, motivated, to create competencies in those activities and business processes needed to run the business. People are at the heart of strategy. The knowledge and experience of people can be the key factors enabling the success of strategies. But they can also hinder the adoption of new strategies too. Human resources may hinder strategy if they are not tailored to the types of strategies being pursued. Where strategies are built around high rates of innovation in products or services, bureaucratic recruitment procedures may deter the entry of creative individuals.
However, turning around the new entity is not for the merely intellectually curious, but for those not content to follow, who desire to rewrite the rules of the game, unafraid of orthodoxy, more inclined to build than to cut, those concerned to make a difference rather than make a career, and those who are absolutely committed to staking out the future first.
Despite a succession of leaders at the helm of Unity Bank, the institution’s fortunes have remained stagnant, raising questions about the effectiveness of its governance and management.
From Falalu Bello’s tenure as the inaugural CEO to Oluwatomi Somefun’s recent retirement, each leader has had a chance to steer the bank towards greatness, but the outcome has been under willing, with the bank struggling to overcome fundamental challenges and meet recapitalization deadlines. The significant regulatory support, including the recent CBN funding, notwithstanding, Unity Bank’s miserable fundamentals , suggesting that the problem may be that of leadership that created the system and culture that perpetuate inefficiency and mediocrity, leaving ordinary shareholders to bear the brunt of the bank’s failures. The revolving door of leadership has yielded little more than a trail of broken promises, eroded capital, and a lingering existential threat.
The stark contrast between the opulent lifestyles of Unity Bank’s top management and the woeful experiences of ordinary shareholders is a harsh reality that continues to plague the bank. While executives revel in fleets of luxury cars and palatial apartments, the common shareholder is left to navigate a parlous landscape of meager dividends, capital erosion, and broken promises, exemplified by the bank’s recent struggles and deteriorating financial health. It’s a tale of two realities, where the custodians of the bank thrive at the expense of those who put their faith and resources into the system. And as regulatory authorities turn a blind eye, the chasm between the haves and have-nots widens, leaving ordinary shareholders to wonder if their investments are merely a license to print money for the privileged few.
The agony of its ordinary shareholders may not be farfetched .Unity Bank’s financial health before its merger with Providus Bank was a cause for concern, with a picture of a struggling institution emerging from its deteriorating asset quality, liquidity challenges, and staggering losses. The bank’s gross non-performing loans stood at 6.5% as of March 2025, indicating significant credit risk and asset quality deterioration. This raised concerns about the bank’s lending practices and risk management capabilities, suggesting that Unity Bank’s asset quality was an Achilles’ heel that needed urgent attention.
The liquidity position was another area of concern, with Unity Bank relying on Central Bank of Nigeria (CBN) support, including ₦50.7 billion in short-term facilities. This not only highlighted the bank’s liquidity challenges but also raised questions about its ability to manage its finances effectively. The repeated reliance on regulatory support suggested that Unity Bank’s liquidity management was not robust, making it vulnerable to market shocks.
The bank’s profitability was in sharp decline, with a staggering ₦62.6 billion loss in 2023, reversing from a ₦941 million profit in 2022. Interest expenses exceeded gross earnings, highlighting the bank’s inefficient operations and inability to generate sufficient revenue to cover its costs. This raised concerns about Unity Bank’s business model and whether it was sustainable in the long term.
The capital adequacy ratio was a major red flag, standing at a staggering -76.14% as of 2023, far below the CBN’s 10% requirement. This indicated that Unity Bank’s capital base was insufficient to absorb potential losses, making it a risk to depositors and the broader financial system. The bank’s liabilities exceeded its assets by ₦326.9 billion, raising questions about its solvency and ability to meet its obligations.
Against this backdrop, the merger with Providus Bank presents an opportunity for Unity Bank to revamp its operations and emerge stronger. However, the road ahead is fraught with challenges. Integrating the two banks’ operations, systems, and cultures will be complex, and there are concerns about how Unity Bank’s legacy bad loans will be addressed. Regulatory compliance will also be crucial, with the CBN’s requirements and stability expectations hanging over the merged entity like a sword of Damocles.
Ultimately, the success of the merger will depend on how effectively the combined entity can address Unity Bank’s deep-seated issues and leverage Providus Bank’s strengths to create a more resilient and competitive financial institution. It’s a high-stakes gamble, but one that could potentially pay off if executed flawlessly.
Unity Bank’s financial health before its merger with Providus Bank was a cause for concern, with a picture of a struggling institution emerging from its deteriorating asset quality, liquidity challenges, and staggering losses. The bank’s gross non-performing loans stood at 6.5% as of March 2025, indicating significant credit risk and asset quality deterioration. This raised concerns about the bank’s lending practices and risk management capabilities, suggesting that Unity Bank’s asset quality was an Achilles’ heel that needed urgent attention.
The liquidity position was another area of concern, with Unity Bank relying on Central Bank of Nigeria (CBN) support, including ₦50.7 billion in short-term facilities. This not only highlighted the bank’s liquidity challenges but also raised questions about its ability to manage its finances effectively. The repeated reliance on regulatory support suggested that Unity Bank’s liquidity management was not robust, making it vulnerable to market shocks.
The bank’s profitability was in sharp decline, with a staggering ₦62.6 billion loss in 2023, reversing from a ₦941 million profit in 2022. Interest expenses exceeded gross earnings, highlighting the bank’s inefficient operations and inability to generate sufficient revenue to cover its costs. This raised concerns about Unity Bank’s business model and whether it was sustainable in the long term.
The capital adequacy ratio was a major red flag, standing at a staggering -76.14% as of 2023, far below the CBN’s 10% requirement. This indicated that Unity Bank’s capital base was insufficient to absorb potential losses, making it a risk to depositors and the broader financial system. The bank’s liabilities exceeded its assets by ₦326.9 billion, raising questions about its solvency and ability to meet its obligations.
Against this backdrop, the merger with Providus Bank presents an opportunity for Unity Bank to revamp its operations and emerge stronger. However, the road ahead is fraught with challenges. Integrating the two banks’ operations, systems, and cultures will be complex, and there are concerns about how Unity Bank’s legacy bad loans will be addressed. Regulatory compliance will also be crucial, with the CBN’s requirements and stability expectations hanging over the merged entity like a sword of Damocles.
Ultimately, the success of the merger will depend on how effectively the combined entity can address Unity Bank’s deep-seated issues and leverage Providus Bank’s strengths to create a more resilient and competitive financial institution. It’s a high-stakes gamble, but one that could potentially pay off if executed flawlessly.
The Unity Bank and Providus Bank merger has sparked intense debate, with critics questioning the regulatory approvals and accounting practices employed to facilitate the deal. The Central Bank of Nigeria’s approval of a ₦700 billion financial accommodation, later revised to ₦540 billion, has raised concerns about the bank’s capital adequacy and accounting practices. This accommodation is structured as a 20-year term loan with bond-like features, but is being treated as Tier 1 capital, despite being a repayable debt. This has sparked questions about the CBN’s interpretation of capital requirements and whether it’s a case of regulatory forbearance or a genuine attempt to strengthen the banking sector.
The treatment of this accommodation as Tier 1 capital is particularly contentious, as it may not meet the required maturity of a perpetual financial instrument. Typically, Tier 1 capital consists of permanent instruments, such as common shares, that can absorb losses without triggering insolvency. The 20-year maturity date attached to the accommodation raises doubts about its classification as Tier 1 capital. Furthermore, the instrument does not meet the convertibility requirement, meaning that there is no principal repayment requirement, which is a key characteristic of debt instruments.
Another area of concern is Unity Bank’s Plant, Property, and Equipment (PPE) value, which jumped from ₦24 billion in 2023 to over ₦690 billion, a 2,800% increase. This has raised concerns about asset inflation and whether the valuation is justified. While revaluation is allowed under IFRS, the scale of the increase has sparked skepticism. The bank’s history of struggles, including a previous merger that failed to yield expected results, adds to the concerns about its governance and whether it’s a repeat of past mistakes.
The merger is seen as a strategic move to shore up Unity Bank’s finances and maintain stability in the northern Nigerian economy. However, critics argue that it’s a desperate attempt to mask deeper issues and may not address underlying problems. The regulatory precedent set by the CBN’s approval of the financial accommodation may have far-reaching implications, potentially creating a moral hazard and encouraging other banks to seek similar treatment. The lack of transparency and accounting gymnastics employed in this deal have raised questions about the CBN’s role in regulating the banking sector and ensuring the stability of the financial system.
Ultimately, the success of the merger will depend on the merged entity’s ability to address the underlying issues and leverage Providus Bank’s strengths to create a more resilient and competitive financial institution. However, the controversy surrounding the deal has highlighted the need for greater transparency and accountability in Nigeria’s banking
