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THE IMPACT OF BANKING SECTOR CONSOLIDATION ON THE FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA (A

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 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 60 ::   Attributes: Data Analysis,abstract, table of content, references ::   2,183 people found this useful

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ABSTRACT

In other to strengthen the competitive and operational capacities of banks in Nigeria with a view towards retuning global and public confidence to the Nigeria banking sector and the economy in general, the central bank of Nigeria instituted a bank reform programme in 2004 that took effect from January 2005.The consolidation exercise saw most of the then 89 bank merging with each other so as to meet the recapitalization requirement of CBN. it was earlier speculated in some financial analysis quarter that the exercise might be the only remedy to the problem of Nigeria financial system by storming stability in the banks.thi however has turned out to be the opposite as most post-merger results tend to high light the consolidation has not improved banks performance. The studies evaluate the impact of banks consolidation on the performance of Nigeria banks. To do this 8 years pre and post merger financial statement of first bank were obtained, adjusted, the average taken and carefully analyzed. The performance indices that were studied include profitability, liquidity, and deposit.

 

 

TABLE OF CONTENTS

Title page    -        -        -        -        -        -        -        -        -        -        i

Declaration -        -        -        -        -        -        -        -        -        -        ii

Approval page     -        -        -        -        -        -        -        -        -        iii

Dedication -        -        -        -        -        -        -        -        -        -        iv

Acknowledgment -        -        -        -        -        -        -        -        -        v

Abstract      -        -        -        -        -        -        -        -        -        -        vi

Table of content   -        -        -        -        -        -        -        -        -        vii

 

CHAPTER ONE

1.0     Introduction                   -        -        -        -        -        -        -        -        1

1.1     Background to the Study        -        -        -        -        -        -        -        1

1.2     Statement of the Problems      -        -        -        -        -        -        3

1.3     Objectives of the Study -        -        -        -        -        -        -        3

1.4     Research Hypothesis     -       -        -        -        -        -        -        4

1.5     Significance of the Study         -        -        -        -        -        -        4

1.6     Scope of the Study -      -        -        -        -        -        -        -        5

1.7     Historical Background of the Case Study   -        -        -        -        5

1.8     Definition of Terms       -        -        -        -        -        -        -        6

 

CHAPTER TWO

2.0     Literature Review          -        -        -        -        -        -        -        -        7

CHAPTER THREE

3.0     Research Methodology -        -        -        -        -        -        -        13

3.1     Introduction         -        -        -        -        -        -        -        -        13

3.2     Population and Sample Size    -        -        -        -        -        -        14

3.3     Sampling Techniques -  -        -        -        -        -        -        -        14

3.4     Sources and Method of Data Collection     -        -        -        -        15

3.5     Methods of Data Analysis       -        -        -        -        -        -        15

3.6     Justification for the Choice      -        -        -        -        -        -        16

 

CHAPTER FOUR

4.0     Data Presentation, Analysis and Interpretation   -        -        -        17

4.1     Introduction         -        -        -        -        -        -        -        -        17

4.2     Data Presentation and Analysis        -        -        -        -        -        -        17

4.3     Testing of Hypothesis    -        -        -        -        -        -        -        24

4.4     Summary of Findings    -        -        -        -        -        -        -        26

 

CHAPTER FIVE

5.0     Summary, Conclusion and Recommendations     -        -        -        27

5.1     Summary    -        -        -        -        -        -        -        -        -        27

5.2     Conclusion -        -        -        -        -        -        -        -        -        29

5.3     Limitations of the Study          -        -        -        -        -        -        -        29

5.4     Recommendations                   -        -        -        -        -        -        -        30

Bibliography

Appendix

 

 

 

 

 

CHAPTER ONE

1.0     Introduction

1.1     Background to the Study

The recapitalization and consolidation exercise in the banking industry by the former central bank of Nigeria Governor, Professor Charles Soludo has necessitated the need for different organization to engage in corporate consolidation (merger and acquisition).the concept of the recapitalization refers to the current trend of compelling all commercial banks toraise their capital base from 2billion to 25billionNaira by the central bank of Nigeria on or before 31st December 2005.this has sent some of these banks on the move to consider merger and acquisition as survival strategy.

          Where We Are Before Consolidation

89 Banks with 3,382 branches predominantly in the urban centre as at June 2004 characterized by structural and operational weakness such as:

  • low capital base; dominance of a few banks
  • Poor asset quality
  • insolvency and illiquidity
  • Over dependence on public sector deposits and foreign exchange trading.
  • weak corporate governance, a system with low depositors confidence

The Vision of Consolidation are as Follows

  • As Africa’s financial centre and CBN as one the best in the world
  • facilitate evolution of strong and safe banking system
  • drive down the cost structure of banks and make them more competitive and development oriented
  • A new banking system that depositors can trust and investors can rely upon ushers in a new economy.

There are indications that banks are now favourably disposed to consolidation (merger and acquisition) after considering various options available to them on account of the introduction of the 25billion naira recapitalization, which will also send most of the banks managing directors and their boards meetings and marshalling of game plans from the preliminary reports from the negotiation table, banks could have several options to explore. In an attempt for banks to meet up with the new requirement, some banks are exploring their option of inviting foreign investors to buy into banks. Other are looking the possibility of getting investor to shore up their capital, and some are looking at the capital market option, while others are considering merger and acquisition.

 

1.2     Statement of Problem

Business organizations are recently seeing consolidation (merger and acquisition) as an alternative means of recapitalizing. The current trend of compelling all commercial banks to raise their capital base from 2billion to 25billion naira by CBN on or before 31st December 2005 has sent some of these banks on their heels to consider merger and acquisition a survival strategy.

The expected problems regarding the merger are

There exist a high degree of calculated risk taking to tap opportunities that come the way of business, but there is risk avoidance in Nigeria business and where risk is low, development is also low and industrial advancement becomes near static.

Consolidation could be a very expensive venture in terms of funds required to prosecute it successfully.

1.3     Objectives of the Study

The fundamental objectives of this study are

  • to assess the implication of consolidation on the banking industry
  • to examine the impact of consolidation on the Nigeria banks
  • to highlight possible challenges posed by the policy of bank consolidation
  • asses Nigeria banks before consolidation
  • identify the benefits of bank consolidation
  • evaluate the prospect of banks after consolidation
  • assess the implication of consolidation on banks in Nigeria

1.4     Research Hypotheses

Bari dam (2001) defines hypotheses as a tentative answer to the problem. The following hypotheses will be formulated from the objectives and will be verified in the course of this research work and noted as null from guide us in finding the solution to the problem that is induced in this research work.

HO: there is no significant relationship between capitalization and liquidity ratio of banks in Nigeria

HO: there is no significant relationship between capitalization and loan to deposit ratio?

1.5     Significant of the Study

The significant of this to the general body of knowledge, enlighten the general public on the effect of bank consolidation on the performance of banks in Nigeria. And also explain the challenges of bank consolidation. This research work would also establish the fact that consolidation (merger and acquisition) is a veritable means for fostering banking growth.

1.6     Scopes of the Study

The scope of this study is to know the challenges of bank consolidation.

Due to the financial constraint coupled with available materials in the Securities and Exchange Commission’s library. Central banks of Nigeria (CBN) first bank plc and association of issuing houses of Nigeria’s library where books relevant to the research topic will be consulted and internet also.

1.7     Historical Background of the Case Study

First bank of Nigeria limited (first bank) is Nigeria’s largest financial services institution by total assets and gross earnings. With more than 10million customer accounts, first bank has over 750 branches providing a comprehensive range of retail and cooperate financial service. The bank has international presence through its subsidiaries, FBN bank (UK) limited in London and Paris,

Since its establishment in 1894. First bank has consistently built relationships with customers focusing on the fundamentals of good cooperate governance, strong liquidity, risk management and leadership.

1.8     Definition of Terms

Bank re-capitalization: It is the act of supplying long-term funds of the owners of the bank to meet the requirement of the monetary authority. Osiegbu(2005).

Consolidation: It is the reduction in the number of banks and other deposit taking institution with a simultaneous increase in the size and concentration of the consolidation entities in the sector (BIS, 2001:2)

Merger: It is the combination of two or more separate firms into a single firm

Acquisition: It is where a company takes over the controlling interest of another company.

 

 

 


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Paper Information

Format:ms word
Chapter:1-5
Pages:60
Attribute:Data Analysis,abstract, table of content, references
Price:₦3,000
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