Providus Bank surpasses CBN capital threshold, hits N65bn capital base

PROVIDUS Bank has confirmed that it has exceeded the Central Bank of Nigeria’s (CBN) revised minimum capital requirement for regional lenders, disclosing that its capital base now stands at about N65 billion.

The bank made the clarification in response to recent media reports, insisting that it is fully compliant with regulatory standards and well above the threshold set for its category.

Under the CBN’s recapitalisation policy, regional commercial banks are required to maintain a minimum capital of N50 billion. Providus stated that it crossed this benchmark as far back as January 2025 and continues to maintain a stronger capital position.

“Providus Bank confirms that it has met its capital requirement since January 2025 and currently holds a capital base of N65 billion, which is above the regulatory requirement,” the bank said.

The lender, known for its banking-as-a-service model, had earlier received provisional approval from the CBN in August 2024 to acquire the struggling Unity Bank, a legacy institution formed from the 2006 merger of nine banks.

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Unity Bank poor financials

Providus Bank has merged with Unity Bank. At the close of 2023 – the year before merger discussions commenced – Unity Bank was technically insolvent. Its total assets were N472.585 billion, while its liabilities were estimated at N799.458 billion, Economy Post earlier reported.

The bank also had a deteriorating capital adequacy ratio. For national banks in Nigeria, the Central Bank of Nigeria (CBN) mandates a minimum CAR of 10 percent. Unity Bank’s CAR was -76.14 percent in 2023 and -89.69 percent in 2022. A negative CAR confirms the bank is critically undercapitalised. For institutions in this situation, mergers or acquisitions become one of the few viable options, hence CBN’s push for Providus to step in. Without the merger, Unity Bank faced the possibility of being placed under administrative control.

Unity Bank interest expense (N36.18 billion) was greater than its gross earnings (N9.29 billion) in 2023, which was a serious red flag and meant the bank did not generate enough income to cover the cost of borrowing. Hence it was not surprising that the bank reported an operating loss over the period.

The bank reported impairment allowance in line with CBN Prudential Guidelines of N203.84 billion on financial assets, which contributed to its overall large loss of N62.6 billion after tax. Banks often make provision for impairment losses if they suspect that some loans will not be repaid. But a high impairment like Unity’s signals credit risk and asset quality deterioration in its loan portfolio. It is also an indication that its Non-Performing Loans are rising and capital is weakening.

Unity Bank has faced long-standing financial pressures, including accumulated losses and non-performing loans. To stabilise the institution and prevent wider systemic risk, the apex bank previously provided a N700 billion intervention fund.

Following shareholder approval at a meeting held in Abeokuta on September 26, 2025, integration activities between both banks are now in progress. As part of the arrangement, Unity Bank shareholders were offered either a cash payment of N3.18 per share or a share swap of 18 Providus shares for every 17 Unity shares.

As of 2023, Providus Bank had a stronger financial position. It reported a profit of N43.55 billion, more than 4 times that N8.025 billion it posted the previous year. The bank’s assets stood at N1.57 trillion, while liabilities were reported at N1.475 trillion, leaving a total equity for its investors at N96.259 billion.

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Providus Bank grew its total assets to N3.8 trillion as of March 31, 2025, primarily driven by the strategic expansion of risk assets, increased allocations to investible securities, and momentum gained from its digital platform, which supported customer acquisition and deposit inflows.

Once completed, the merger is expected to significantly expand Providus Bank’s footprint, potentially elevating it from a regional player to a national competitor. Unity Bank currently operates about 240 branches, far exceeding Providus’ existing network.