The approval of its merger with ProvidusBank Plc by the Central Bank of Nigeria failed to lift the stock price of Unity Bank Plc on Wednesday from the N1.51 per share it traded on Monday on the floor of the Nigerian Exchange Limited (NGX) amid fear of its delisting from the Exchange.
The stock price remained flat at N1.51 per share after Wednesday trading, the point it was after trading on Monday when it dropped N0.01 or 0.66 percent from N1.52 per share it closed for trading last week.
In its Year-till-Date performance, Unity Bank’s stock price on NGX has depreciated by N0.11 or 6.79 percent from N1.62 per share it closed for trading in 2023.
According to a report, the CBN approved a financial package worth N700 billion to support the proposed merger which was previously opposed and stopped by Jim Obazee, the Special Investigator during his investigation of the apex bank and its related entities after he recovered N135 billion hidden in Unity Bank and four other banks by the embattled former CBN Governor, Godwin Emefiele in exchange for equities.
However, analysts have expressed the possibility of Unity Bank delisting from NGX.
The Vice President of Highcap Securities Limited, David Adnori, stated that the senior partner and scheme of agreement in the merger would decide if Unity Bank would delist from the Exchange.
On his part, Investment Banker & Stockbroker, Tajudeen Olayinka stated, “I think it is in the interest of the two banks to take steps to put their respective banks on the path to meeting the new capital requirements for banks as stipulated by CBN.
“CBN also indicated financial accommodation for the two banks to sustain their post-merger existence.
He added “The implication of this is that the proposed merger of the two banks must have been regulatory induced. It also suggests that at least one of the two banks may not be in a good financial position to attract a suitor, hence the need for CBN to provide a financial accommodation, which I suspect to be a stabilisation facility in the form of a term loan.
“The essence is to ensure the survival of the two banks post new capital requirements’ deadline.”
Unity Bank commenced operations in January 2006, following the merger of nine banks with competencies in investment, corporate and retail banking. It is one of Nigeria’s leading retail banks with 213 business offices across the 36 States and Federal Capital Territory.
It posted negative financials in the nine months’ results ending September 30, 2023, that was recently released.
The bank’s financial results released on the NGX showed a loss after tax of N47.917 billion, down by 2,461 percent from profit after tax (PAT) of N2.029 billion in the same nine-month period of 2022.
It also reported a Foreign Exchange (FX) revaluation loss of N38.162 billion, an increase of 70,565 percent from N54.005 million FX revaluation loss recorded in nine months to September 2022.
Its gross income in the nine months was also N38.183 billion, a 10 percent drop from the N42.292 billion gross income recorded in the comparable period of 2022.
