…Politics takes centre stage in deal-making
STAFF of Unity Bank are in panic weeks after the announcement of merger between their financial institution and Providus Bank. They are afraid of losing their jobs, which will likely be the result after the Providus Bank acquisition.
The deal, which Economy Post has found out to be an acquisition rather than merger, will see Providus Bank dictate the pace. Several staff members of Unity Bank are already aware that they will have no place in the new structure being set up by Providus Bank.
Economy Post found that Providus Bank is already preparing some of its staff to man former Unity Bank branches. Unity Bank has 220 branches, while Providus has just 23 branches. However, the new Providus Bank will not retain all of the Unity Bank’s 220 branches, which are mostly characterised by inefficiencies and financial losses, insiders told Economy Post.
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Unity Bank’s losses stood at N38.8 billion in the first half (H1) of 2023, from a profit of N1.6 billion in H1 2022. It projected a a pre-tax loss of N20.7 billion in the second quarter (Q1) of 2024 as against N7.826 billion loss in the first quarter (Q1) of this year.
Staff are making alternative plans
It was not exactly clear how many staff members would lose their jobs, but some staff members of Unity Bank told Economy Post they were already preparing for any uncertainty.
An employee of Unity Bank in Lagos Island, who asked not to be mentioned, said: “I have already made up my mind to go when I am asked to. I am planning to leave the country for Canada any moment from now.”
The Unity Bank employee said he knew all was not well two years before now.
“I have been on this preparation for two years. Once I saw our trajectory two years ago, I gave up and started making exit plans. I am at a stage now where I am ready to resign or go,” the staff member noted.
Another Lagos-based staff member of the bank said she had already started a business, which was being managed by her sister.
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“I have saved up about N11 million after working in the banking system for 18 years. Right now, I have a business that is being managed by my younger sister. Once we are done with this and I am asked to exit the system, I will ask for my money and move on to the business.”
Unity Bank inefficiencies
Economy Post gathered from Providus Bank insiders that the view of their bank is that Unity Bank and its staff are inefficient and will be given only few places in the new bank.
“They will only be allowed to play peripheral roles,” said a bank staff member who asked not to be named.
“The thinking is that we do not want them to bring Unity Bank model to our bank. We are a technology-driven bank that is focused on the future, but we do not think that’s their vision,” the staff member noted.
The Central Bank of Nigeria (CBN), on August 7, aided the proposed marriage between Providus Bank and Unity Bank by providing N700 billion “financial accommodation” to address Unity Bank’s total obligations to it and other stakeholders.
A statement signed by Acting Director of Corporate Communications, Ms Hakama Sidi Ali, said: “The fund will be instrumental in addressing Unity Bank’s total obligations to the Central Bank and other stakeholders. It is unequivocal to state that the CBN’s action is in accordance with the provisions of Section 42 (2) of the CBN Act, 2007. This arrangement is crucial for the financial health and operational stability of the post-merger organization,” the CBN said.
Why Unity Bank won’t be allowed to fail
The basis of the merger is clear: Providus Bank is a regional bank while Unity is a national bank. Providus plans to leverage Unity’s national spread to become a national bank. Unity Bank, on the other hand, is leveraging Providus fast growth and technology.
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Secondly, Unity is a bank for the northern Nigeria and its collapse will affect several low-income depositors from the region.
“The CBN does not think it is appropriate to allow Unity Bank to fail due to the regional side of its ownership. Also, allowing it to fail will bring more opposition from the North against President Bola Tinubu, who already is facing backlash from the region due to high cost of living, especially high petrol price. CBN Governor, Mr Olayemi Cardoso, being a close ally of President Tinubu, cannot allow this kind of political mistake to happen in his watch,” a close ally of the president, who pleaded anonymity, said.
