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Nigerian banking sector has under gone important structural and institutional changes over the last few decades caused by restructuring and liberalization of the financial market and has had significant implications for the Nation banking sector.

The total bank sector = 89

Later reduced = 25 to 23

Later increased = 24

All the total banks = 17 banks in merger with other banks.

(Asogwa, 2003).

The restructuring and liberalization of the financial market were undertaken as one of the blue prints of the Structural Adjustment Programme (SAP) of the government, overall, the banking sector has experience steady consolidation through recapitalization and mergers and acquisition that have resulted in fewer banks holding a greater value of the total assets in the sector (Okpanachi, 2011). Spearheaded by the announcement by the Central Bank of Nigeria (CBN) on July 6, 2004 about a major reform program that would transform the banking land scope of the country, and presented process of merger and acquisition has taken place in the Nigeria banking sector, shrinking the number of banks from 89 bank to 25 banks but later reduced further to 23 bank with the  merger of some bank like first Atlantic  Bank plc, and Inland Bank to form Fin Bank Plc, Stanbic IBTC Bank. The number of operating bank later increased to 24 banks with the entering of City Bank Nigeria.

Based on the findings, the study recommends that the regulatory authority is of the capital market in Nigeria should continue to make concerted effort towards reducing the effects of the global financial meltdown on the Nigerian stock exchange. This will help top restore investor’s confidence and revival in the market.

Limited with there cent merger and acquisition of some of the nine rescued bank that is the merger of Access Bank Plc with International Bank Plc, merger of Ecobank transactional incorporated with Oceanic Bank Plc, merger of First City Monument Bank (FCMB) with Fin Bank plc, the number of banks operating in Nigeria would be reduced further.

The main thrust of the 13-point reform agenda was the prescription of a minimum share holders funds of N25 billion for a Nigeria deposit money bank not later than December 31, 2005. The banks were expected to share up their capital through the injunction fo fresh funds where applicable but were most importantly encouraged to enter into mergers/acquisitions arrangement with in other relating smaller bank this taking the advantage of economic of scale to reduce cost of doing business and enhance their competitive locally and internationally. The consolidation process n Nigeria has basically been driven by government restructuring efforts rather then being a market based process (Aso GWA, 2003).

Consolidation has been used as an efficient way of resolving problem of distress among bank (Opanachi, 2011).

There have been several cases of purchases and assumptions basically acquisition type of transaction which involves purchasing the assets of dialed bank and assumption of it liabilities (particularly deposit) by another insured bank or by private investors (Ayaji, 2005).


Extensive government intervention characterized financial sector policies, beginning in the 1960, and intensifying in the 1970s, the objective of which was to influence resources allocation and promote indigenization since 1987 financial sector reforms have been implemented, encompassing element of liberation and measures to enhance prudential regulation and tackle bank distress.

Consolidation which is an element of liberalization is viewed as the reduction in the number of banks and other deposit taking Economy with a simultaneous increase in size and concentration of the consolidated entities in the sector (Ayaji 2005).

The means between consolidation and financial secto4r stability any growth is explained by two polar view, proponent of consolidation opine that increased size could potentially increased bank return through revenue cost efficiency again. It may also reduce industry risk through the elimination of weak bank and create better diversification opportunities (Berger, 2000).

On the other hand, the opponents (customers) argue that consolidation could increase bank propensity toward risk taking through increase in coverage and off balance sheet operation.

In addition, scale economics are not unlimited as larger entities are usually more complex and costly to manage (De Nicole et all, 2003). In the light of these existing two polar views on bank consolidation this study shall examine the impact of the banking sector reforms particularly, consolidation on the Nigerian banking sector.


The study will focus on the following

  1. To investigate the impact of consolidation of Nigerian banks performance
  2. To discuss the effect of the consolidation exercise on the financial structure of Nigerian banks.
  3. To critically evaluate the structural and bank implication of the merger and acquisition option in post consolidation
  4. To identify those that will benefit and lose in the consolidation process.

This material content is developed to serve as a GUIDE for students to conduct academic research

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