The Effect Of Bank Consolidation On The Performance Of Banks In Nigeria
ON THE BANKING INDUSTRY
The directive by the Central Bank that, banks should raise their capital base to the tune of N25 billion several implications for both the banking industry and the Nigerian economy at large. These implications are as follows: with respect to the banking industry, the implications can be categorized into two parts namely; brand and structural implications.
2.8.1 BRAND IMPLICATION: With regards to branch implications, the new entities that will come from the dust of consolidation will need to deal with brand-related issued such as:
There will be a change of name if two or more banks come together and decide not to adopt any of the participating bank name.
The logos which were formally used by each of these banks will be dropped and another one adopted.
There will also be the evolution of a new brand culture for the emerging banks after consolidation.
The brand message of the consolidated banks will also be changed.
The place of information communication technology (ICT) in the bank will be changed, that is, banks software as the new banks will go for the best to meet up customers demand.
2.8.2 STRUCTURE IMPLICATION: The recapitalization of banks will leave in its wake, a number of structural issues which will have direct impact on staff, customers and the entire banking sector. They include:
The reduction in the number of banks in the country
The closure of many small banks, especially those in the rural areas with poor capital deposit.
Increased competition due to better incentives and rendering of banks services.
Acquisition digestion issues which will include loss of jobs, consolidation of branch locations and tackling of inefficiencies and bureaucracies. Reconstitution of management and board of the banks.
Source: THE NIGERIA BUSINESS INFORMATION
2.9 PROSPECT OF BANKS AFTER CONSOLIDATION
The initial public offering by banks through the capital market when completed is likely to increase the level of financial deepening as evidenced in the upsurge in the volume and value of trading in stock market.
The reform in the banking industry has been able to attract more foreign investment inflow, especially in the area of portfolio investment; this development if sustained will boost the level of economic activity especially toward non oil sector.
The consolidation of banks is likely to attract a significant level of foreign banks entrance into Nigeria which will become a feature in the industry over time. This will bring about more confidence by the international community of the banking sector thereby attracting more foreign investment into the country. As the level of financial intermediation increase, interest rate is likely to fall and increase lending to the real sector that will generate employment and booster growth.
CHAPTER THREE
3.0 METHODOLOGY
The first two chapters of this research work have dealt extensively with the introduction and review of the literature on the subject and matter. It is now necessary to describe how the research is to be carried out.
Methodology deals with the methods and procedures of carrying out the study. It includes research design, sample procedure, questionnaire design, data collection and data analysis technique.
3.1 RESEARCH DESIGN
It is the frame work for a study that is used as a guide in collecting and analyzing data. This research will make use of the descriptive research design while investigating the research topic. ‘THE EFFECT OF BANK CONSOLIDATION ON THE PERFORMANCE OF BANKS IN NIGERIA’.
Also it is refer to a set of instruction for making something which leaves the details to be worked out. According to Okwandu (2004) design is aterm used to describe a number of decision, which need to be taken regarding the collection of data before ever the data are collected.
3.2 DATA COLLECTION METHOD
Data collection entails obtaining relevant information regarding the major idea of the research questions/hypothesis of the study for the purpose of confirming whether they are true or not. In the view of Olaitain et al (2000), it is the systematic way of obtaining information, fact evidence, or observation toward answering specific research question or testing stated hypothesis of a research. Basically there are two types of data. These are: primary and secondary data. Primary data are data collected from its original source or for a specific purpose. While secondary data are collected from pre-existing ones. Secondary data is used in this study. The secondary information was gotten from CBN statistical bulletin and annual report.
3.3 OPERATIONAL MEASURES OF THE VARIABLES
In the research work, the independent and dependent variable are fit to an equation called a regression