INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Following the announcement by the Central Bank of Nigeria on July 6, 2004 about a major reform that would transform the banking sector of the country, an unprecedented process of mergers and acquisitions has taken place in the Nigerian Banking Sector shrinking the number of banks from 89 to 25 banks or banking groups involving 76 banks which altogether account for 93.5% of the deposit share of the market. Thirteen (13) out of the 89 banks, accounting for only 6.5% of the deposit share of the industry were not able to make it (CBN, 2006).
The main thrust of the 13-point reform agenda was the prescription of a minimum shareholders’ fund of N25 billion for a Nigerian deposit money bank not later than December 31, 2005. The banks were expected to shore up their capital through the injection of fresh funds where applicable, but were most importantly encouraged to enter into merger/acquisition arrangements with other relatively smaller banks thus taking the advantage of economies of scale to reduce cost of doing business and enhancing their competitiveness locally and internationally.
Mergers and acquisitions represent the ultimate in charge for a business and it is expected to add value to the business. No other event is more difficult, challenging, or chaotic as a merger and acquisition. It is imperative that everyone involved in the process has a clear understanding of how the process works. However, merger and acquisitions do not add value in all cases (Ajayi, 2005). There were cases where the synergies projected for mergers and acquisitions deals were not achieved and cultural issues are often cited as the top factors in failed integrations.
1.2 STATEMENT OF THE PROBLEM
The recent outbreak of bank mergers and acquisitions in Nigeria is attracting much attention, partly because of heightened interest in what motivates firms to merge and how mergers and acquisitions affect efficiency. However, there are often two distinct views to the rationale behind merger and acquisition. The first held view of mergers, especially those involving mega firms, is that firms are merging just to get bigger and not to go more efficient.
Accompanying that notion is the fear that as merging firms grab greater market share, individual freedoms, competition and efficiency are threatened, because they are perceived as greater concentration of power.
The second view holds that firms merge not just to get bigger but also to be more efficient. It is claimed that mergers enable the banking industry to take advantage of new opportunities created by changes in the technological and regulatory environment. A fall out of this is the reduction in the number of banks nationwide, but the concentration of power in local banking markets has not increased. And the very force of regulatory change that spurred bank mergers in also bringing new sources of competition to local banking markets ( especially the management of the country’s external reserves). Hence, mergers are playing a useful role in reshaping the banking industry without risking a lack of competition; however, its impact on efficiency deserves attention. This study shall examine the management implications of the merger and acquisitions that had taken place in the Nigerian banking sector with special interest in the efficiencies of these banks.
| Project details | Contents |
|---|---|
| Number of Pages | 124 pages |
| Chapter one | Introduction |
| Chapter two | Literature review |
| Chapter three | methodology |
| Chapter four | Data analysis |
| Chapter five | Summary,discussion & recommendations |
| Reference | Reference |
| Questionnaire | Questionnaire |
| Appendix | Appendix |
| Chapter summary | 1 to 5 chapters |
| Available document | PDF and MS-word format |
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