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YOU ARE EXPECTED TO USE THIS PROJECT AS A GUIDE; HOWEVER, IF YOU WISH TO USE IT WHOLLY, YOU WILL BE RESPONSIBLE FOR ANY ADJUSTMENT YOUR SUPERVISOR MAY REQUIRE

IT WILL BE SENT TO YOUR E-MAIL AFTER PAYMENT SAME DAY

 

PROJECT TOPIC  : CORPORATE MERGER AND ACQUISITION AS A TOOL FOR BANK SURVIVAL IN THE NEW ERA OF BANKING REFORM (Case Study of UBA)

PROJECT PROPOSAL

BACKGROUND OF THE STUDY
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 has taken place in the Nigerian Banking Sector shrinking the number of banks from 89 banks to 25 banks (Soludo, 2004) 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.

Mergers and acquisitions represent the ultimate in change 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 (Okonkwo, 2004). 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. There are cases where the synergies projected for merger and acquisition deals are not achieved. “People” problems and cultural issues are often cited as the top factors in failed integrations.

The biggest harvest of the Soludo prescription and the greatest shocker to the Nigerian banking industry was the announcement on 18 January, 2005 of a merger between United Bank for Africa (UBA) and Standard Trust Bank (STB). The amalgam of STB and UBA now called and new UBA has a balance sheet of more than N1.4 trillion, shareholders’ funds of more than N187 billion, over 726 branches and customers in excess of 7.2 million as December 2010 (UBA, 2010). Such indices would readily qualify the bank as the largest in Nigeria.

The merger between the two banks has spark off serious concern among big players in the market. Major players in the banking industry are worry that the merger, given the huge resources will lead to the emergence of a bank that will be too big and strong by the local industry standard to compete with. Industry analysts were of the opinion that the issue is no longer N25 billion capital base but how to remain a leader in the Nigerian market and beyond. This study shall examine the role of merger and acquisition as a tool for survival in the post-consolidation era of Nigerian banking sector with special focus on the New UBA (Standard Trust Bank and United Bank for Africa merger).

STATEMENT OF RESEARCH 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 competition. One often held view of mergers, especially those involving megabanks, is that firms are merging just to get bigger. Accompanying that notion is a fear that as merging firms grab greater market share, individual freedoms and competition are threatened, because bigger is perceived as greater concentration of power. In contrast to that negative view, it is being argued in this study that mergers are motivated by more than a desire to become bigger. Mergers enable the banking industry to take advantage of new opportunities created by changes in the technological and regulatory environment. While mergers have certainly reduced the number of banks nationwide, 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). Hence, mergers are playing a useful role in reshaping the banking industry without risking a lack of competition. This study seeks to investigate empirically, the potency of merger and acquisition as a survival strategy in post-consolidation by attempting to the answer the research questions stated in 1.4 below.

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. An examination of merger and acquisition as a survival strategy.
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. Is merger and acquisition a survival strategy?
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?

RESEARCH HYPOTHESIS
The research hypothesis to be tested in the course of this study is stated below as:
Ho : That merger and acquisition is not a survival strategy in Nigerian banking sector.
H1 : That merger and acquisition is a survival strategy in Nigerian banking sector.

RESEARCH METHODOLOGY AND SOURCES OF DATA
Survey research 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.

SIGNIFICANCE OF THE STUDY
No matter which approach is selected by banks within the Nigerian financial sector, the current consolidation will have a number of effects and implications. These effects and implications can be broken into 2 broad categories: 1. Brand implications; 2. Structural implications. This research work intends to critically evaluate these implications.

It is unprofessional to carry on the task of merger and acquisition without considering the motives behind it. So, the significance of this project work relates to the evaluation of merger and acquisition as a survival option in the post-consolidation era in the Nigerian banking sector and identifying its possible effects on the level of competition in the sector.

It would also be an invaluable tool to students, researchers and other individuals that want to know more about the role of merger and acquisition as a business strategy.

SCOPE OF THE STUDY
Although, about twenty-five banks emerged after the recapitalisation exercise, nineteen of them were products of merged banks. However, the merger between Standard Trust Bank and United Bank for Africa was the least expected and many are 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).

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. The research method shall then be outlined in chapter three before results are presented and discussed in chapter four. In chapter five, concluding comments shall reflect on limitations of the study and identify implications of the findings.

REFERENCES

Okonkwo, C. O. (2004) “Legal Framework for Mergers and Acquisitions”. A Paper Presented at The Retreat on Mergers and Acquisitions in the Nigerian Banking Industry organised by Central Bank of Nigeria and West African Institute for Financial and Economic Management (WAIFEM). Abuja.
Soludo, C. C. (2004) Consolidating the Nigerian Banking Industry to meet the development challenges of the 21st Century. Being an address delivered to the special meeting of the bankers’ committee, held on July 6, at the CBN headquarter, Abuja.
United Bank for Africa Plc (2010) Annual Report and Statement of Accounts.

 

 

PROJECT PROPERTIES
Project Status
Available
Number of Chapters
5
Number of Pages
100
Number of Words
15,929
Number of References
35
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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