MANAGEMENT IMPLICATIONS OF MERGERS AND ACQUISITIONS IN THE BANKING INDUSTRY

📄 Project Abstract

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...