merger and acquisition, bank merger and acquisition, what is merger and acquisition, bank recapitalisation, consolidation, nigerian banking sector, banking sector reforms
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PROJECT TOPIC  : THE EFFECT OF MERGER AND ACQUISITION IN BANK RECAPITALISATION IN NIGERIA (Case Study of UBA)

PROJECT PROPOSAL

BACKGROUND OF THE STUDY
The Nigerian banking industry has witnessed a dramatic transformation since the December 31, 2005 deadline for bank recapitalisation. Overall, the banking sector has experienced steady consolidation through recapitalisation and mergers and acquisitions 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 on July 6, 2004 about a major reform program that would transform the banking landscape of the country, an unprecedented process of merger and acquisition had taken place in the Nigerian Banking Sector; shrinking the number of banks.

Immediately after the recapitalization deadline ended in December 31st, 2005, the number of operating banks in the country reduced from 89 banks to 25 banks but later reduced further to 23 with the merger of some banks like First Altantic Bank Plc and Inland Bank to form Fin Bank Plc, Stanbic Bank Plc and IBTC to form Stanbic-IBTC bank. The number of operating bank later increased to 24 banks with the entering of Citibank Nigeria Limited. With the recent merger and acquisition of some of the nine rescued banks i.e the merger of Access Bank Plc with Intercontinental Bank Plc; merger of Ecobank Transnational Incorporated with Oceanic Bank Plc; merger of First City Monumental Bank with Fin Bank Plc, the number of banks operating in Nigeria will be reduced further.

However, in August 2011, the CBN revoked the licenses of three of the rescued banks for failing to show ability to recapitalise ahead of the September 30, 2011 deadline, effectively nationalizing Bank PHB, Afribank and Spring Bank. The assets of these banks were transferred to three newly created, nationalised banks: Keystone Bank, Enterprise Bank and Mainstreet Bank. AMCON which took over the banks also injected N680 billion to recapitalise the banks. Unity Bank Plc, one of the bailed out banks has already recapitalised while Wema Bank Plc, the last of the rescued banks, has since scaled down operations to become a regional bank with emphasis in the south west region.

The waves of mergers and acquisitions that had taken place in the Nigerian banking industry raise an important question of whether bank consolidation enhances the financial performance of Nigerian banks. Hosono et al (2007) argues that consolidation may increase or decrease the performance of a bank. There have been no study that evaluates the effects of merger and acquisition in bank recapitalization in Nigeria as it is a rare occurrence in the country not until the recent banks mergers and acquisitions witnessed in the banking sector as occasioned by the banking reform.

STATEMENT OF THE PROBLEM
The recent outbreak of bank mergers in Nigeria is attracting much attention, partly because of heightened interest in what motivates firms to merge and how mergers 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 get more efficient. Accompanying that notion is the fear that as merging firms grab greater market share, individual freedoms, competition and efficiency are threatened, because bigger is perceived as greater concentration of power.

The second view holds that firms merger 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 Fallout 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 is also bringing new sources of competition to local banking markets (especially the management of the country’s external reserves). The post-consolidation performance of all Nigerian banks was overcast in 2009 by the global financial and economic crisis, which was precipitated in August 2007 by the collapse of the sub-prime lending market in the United States. Sanusi (2010) attributed the post-consolidation challenges of Nigerian banking industry to the inability of the industry and the regulators to sustain and monitor the sector’s explosive growth which as a result led to risk-build in the system. This study shall investigate these two contrasting views by examining the effect of the merger and acquisition that had taken place in the Nigerian banking sector on the efficiencies of a selected bank.

OBJECTIVES OF THE STUDY
The purpose of this paper is to examine the overall motive for Banks mergers and acquisitions in the Nigerian Banking sector. The study will also focus on the following micro objectives:
1. To critically evaluate the structural and brand implications of the merger and acquisition option in the post consolidation era.
2. To identify the motives behind corporate meagre and acquisition.
3. To investigate the impact of merger and acquisition on bank efficiency.
4. To examine the impact of merger and acquisition on the level of competitiveness in the Nigerian Banking Sector.
5. To identify those that will benefit and lose in the merger and acquisition process.

RESEARCH QUESTIONS
The study would examine the following questions:
1. What are the implications of bank merger and acquisition?
2. What are the motives behind bank merger and acquisition?
3. How do merger and acquisition impact on efficiency?
4. How would bank merger and acquisition affect competition in the Nigerian banking sector?
5. What are the benefits and short-comings of merger and acquisition?

STATEMENT OF HYPOTHESIS
The hypothesis that would be tested in the course of this research is stated below as:
H0: That bank merger and acquisition does not affect the banks’ performance in Nigeria
H1: That bank merger and acquisition affects the banks’ performance in Nigeria


RESEARCH METHODOLOGY AND SOURCES OF DATA
Both survey and content analysis method shall be adopted in this study. The survey method shall be used to gather information from respondents concerning their opinions on the role of merger and acquisition as a survival strategy in post consolidation era in Nigerian banking sector. The questionnaire to be used shall be carefully administered and a total of fifty (50) respondents in the banking sector would be selected for the purpose of this analysis. The sampling shall be done randomly such that the respondents shall cut across different departments of United Bank for Africa (The New UBA) at the branches in Lagos State. This could to some extent give a basis for generalisation. The data, which would be collected from the questionnaire, will be presented and analysed using frequency tables and simple percentage method. This will make the analysis of the data more concise and simple. While the content analysis method shall be used to analysis the financial performance of the bank after the merger.

SIGNIFICANCE OF THE STUDY
One major significance of this project work relates to the evaluation of merger and acquisition in terms of its impact on efficiency in the post-consolidation era in the Nigerian banking sector. This will serve as a yardstick for the justification for the recent bank merger and acquisition in the Nigerian banking sector.

SCOPE OF THE STUDY
Although, a number of bank mergers had taken place since the recapitalisation exercise, the merger between Standard Trust Bank and United Bank for Africa was the least expected and many were of the opinion that the merger was not to meet the December 31 deadline of the apex, but fuelled by the need to survive and be a major player in the post-consolidation era in Nigerian banking sector. In carrying out this research work, attention would be focused on the Nigerian Banking Industry with special reference to the merger between United bank for Africa (UBA) and Standard Trust Bank (STB). Besides, the field survey shall be conducted only in Lagos branches of the new United Bank for Africa (UBA).

PLAN OF THE STUDY
This research work shall commence by providing a background of the subject matter justifying the need for the study in chapter one. This would be followed by literature review and traditional views on merger and acquisition in chapter two.
The research method shall then be outlined in chapter three before results are presented and discussed in chapter four. In chapter five, summary, conclusion and recommendations shall be discussed.

 

REFERENCES
Ajayi, M. (2005) “Banking sector reforms and bank consolidation: conceptual framework.” In: Banking sector reforms and bank consolidation in Nigeria. CBN Bullion, Vol. 29, No. 3. April/June.
Hosono, K.; Sakai, K. and Tsuru, K. (2007) “Consolidation of Banks in Japan: Causes and Consequences”. National Bureau of Economic Research (NBER) Working Paper Series, No. 13399.
Okpanachi, J. (2011) “Comparative analysis of the impact of mergers and acquisitions on financial efficiency of banks in Nigeria”. Journal of Accounting and Taxation, Vol. 3, No. 1, pp. 1-7.
Sanusi L. S. (2010) The Nigerian Banking Industry: what went wrong and the way forward. Being the full text of a Convocation Lecture delivered at the Convocation Square, Bayero University, Kano, on February 26.

 

 

PROJECT PROPERTIES
Number of Chapters
5
Number of Pages
89
Number of Words
13,438
Number of References
32
Project Level
B.Sc.
Price
N10,000 (Non-Negotiable)
Abstract and Sample of the Questionnaire included
How to Pay for this Project . . . .CLICK HERE

Keywords: merger and acquisition, bank merger and acquisition, what is merger and acquisition, bank recapitalisation, consolidation, nigerian banking sector, banking sector reforms

 

 

 

 

 

 

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