TABLE OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract vi-vii
Table of Contents viii-ix
CHAPTER ONE:
INTRODUCTION 1
- Background to the study 1
- Statement of the Research Problem 2
- Objectives of the Study 3
- Research Questions 3
- Research Hypothesis 3
- Scope of the Study 3
- Limitation of the Study 3
- Significance of the Study 4
1.8 Operational Definition of Terms 4
1.9 Profile of the Case Study 5
CHAPTER TWO:
2.0 LITERATURE REVIEW 7
2.1 Conceptual Framework 7
2.2 Theoretical Framework 15
2.3 Empirical Framework 17
2.4 Limitation in Literature Review
CHAPTER THREE
- Research Methodology 19
3.1 Restatement of Research Questions and Hypothesis 19
3.2 Method and Source of Data Collection 19
3.3 Population of the study 20
3.4 Research Design 20
3.5 Sample Size 20
3.6 Method of Data Analysis 20
3.7 Data Collection Instrument 21
CHAPTER FOUR:
4.0 Data Presentation and Analysis 22
- Introduction 23
- Data Presentation 26
- Data Analysis and Interpretation 29
CHAPTER FIVE:
Discussion of Findings, Conclusion and Recommendation
5.0 Introduction 30
5.1 Discussion of Findings 30
5.2 Conclusion 31
5.3 Recommendations 31
Appendix 32
Questionnaire 33
References 34
ABSTRACT
The study was designed to examine the effect of merger and acquisitions in the banking industry in Nigeria the need to carry out this study arose from the challenges faced by Nigerian banks despite the reduction of banks from 89-25 at the end of 31st December 2005. These current challenges faced by banks in the country have made researchers to question the efficacy of the consolidation of bank in Nigeria; the exploration research method was used for this study. Data was collected from textbooks, journals, conference paper and the internet. The finding reveal that the consolidation (mergers and acquisition) activities in Nigeria did not meet the desired objectives of liquidity, capital adequacy and corporate governance which have resulted to more troubled banks after the consolidation on the basis of these, the study recommend among others the leadership should have the skill and require experience necessary to perform the role effectively and should have a sound understanding of the nature of the company business and it risk for smooth and efficient post merge operation and also that corruption, fraud and insider abuses must be minimized in the banking industry for the country to derive the benefit of merger and acquisitions of bank.
CHAPTER ONE
INTRODUCTION
1.0 Background to the Study
The word merger and Acquisition have been in the forefront in the economic environment in recent years. Today, Bank in the economies are from time to time with a vast array of Challenges from the operating environment.
Corporate in efficiency have been rampaging the corporate world. It is not uncommon to see various organizations being plagued with series level of unprofitability. This run through the Whole gamete of economy, both profit and non-profit making companies operate in a dynamic environment created and influenced by a variety of forces.
The relevance of banks in economics of any nation cannot be over emphasizing. They are the corner stone of the economy of the country. The economics of all market oriented nation depend on the efficient operation of complex and delicately balance system of money and credit backs are indispensible element in these system. They provide a bulk of money supply as well as the primary means of facilitating the flow of credit. Consequently, it is submitted that the economics well being of a nation is a function of advancement and development of her industry (obadan 1997).
The financially deregulation in Nigeria that started in 1987 and the associated financial innovation have generated and unprecendent degree of the competition in the banking industry. The deregulation initially pivoted powerful incentures for the expantion of both side and numbers of banking and non-baking institution and between banks and non-financial intermidiaries.
As given in the address professor Charles Soludo former CBN governor in 2004, the economic adjustments in Nigeria at focused on structural and institutions reforms: which includes the following (Soludo 2005)
- Strengthened the institutional framework for the conduct of monetary policy.
- Bank recapitalization and consolidation.
iii. To possibly eliminate or reduce government ownership of any bank (to more than 10% percent).
- Improved transparency and co-operate governance.
- Zero tolerance to misreporting and data rendition. Anti money laundry regulation
- Implemental of based principle and risks based supervision
vii. Payment system reform for efficiency especially E-payment
viii. Reperforming the exchange rate management system (Adopting of the wholesale)
- Restricting Nigeria security printing Plc.
Going by the main focus of the reform, banks recapitalization and consolidation stand out the main method by which the aspect was achieved was by directing individual bank on racing their capital base to a minimum of 25 billion naira or in alternative merger with other bank.
1.1 Statement of the Research Problem
In recent time merger and acquisition have been a typical issue among the captains of the economy what constitutes the focus of the research is the various environment forces that have crippled the effectiveness and productivity of the economy and the seemingly group strategy way out. Every company has had it rough in the economy because of their in abilities to perform to the full capacity of their production system.
The unproductively of these various corporate bank has dealt a great blow on the economy at large. The market could not have their needs not talk less of saturating the market with the required production and services.
The multiple effects of these short coming leads to inflation in the economy where more cash is chasing few goods and services. The unproductively is also witness in the main study of the economy, banking industry. The banking industry has been characterized with poor financial capacity. The economy is not private investment because of the inability to allow more funds into their economy, even the real sectors economy was affected because of their inability to gain access to loan facilities in banking industry. There are cases of banks distressed as a result of this poor financial liability of the consolidation in the baking industry to share up of the capital based of various banks, it is against this backdrop the management at the apex bank in the country, Central bank of Nigeria proposed consolidation in the banking industry to share up the capital base of the various banks in the industry for profitability . The imperfect of merger and acquisition to ensure corporate profitability remains the focus of the study. In view of these problems, research questions are asked; which are to be later resolved.
1.2 Objectives of the Study
The main objective of the study is to examine the effect of merger and acquisition on commercial bank performance using Intercontinental Bank plc Lagos State. The specific objectives of the study are to:
- To examine the effect of Merger and Acquisition on Bank performance.
- Identify the effect of Merger and Acquisition on commercial Bank productivity
1.3 Research Question
The following question guided the study:
- What are the effects of Merger and Acquisition on commercial bank performance?
- What are the effects of Merger and Acquisition on commercial bank productivity?
1.4 Research Hypothesis
The following hypothesis were formulated and tested:
Ho1: Merger and Acquisition does not have any significant effect on Banks performance.
Ha1: Merger and acquisition have significances effect on Banks performance.
Ho2: Merger and Acquisition does not have any significant effect on Bank productivity.
Ha2: Merger and Acquisition have significant effect on Bank productivity.
1.5 Scope of the Study
There are other strategic function through which an organization can be productive but this research work is limited to look at the effect of commercial bank performance “Merger and Acquisition on bank profitability “ Merger and Acquisition on organization profitability” The areas that will be covered in the course of carrying out this research work will include the responsibility of realizing how effective and efficient an organization can be if a strategic “Corporate marriage” is arranged with another offering the same service.
Also, the process that will be involved in the scheme of merger will be understudying to enhance scheme of merger will be understudying to enhance a successful merger and acquisition.
The process of management and cultural due diligence that need to be attended to in course of merger and acquisition will be understudying in the course of the research of the work. In the same vein, the after math positive effect of the same merger and acquisition will also be adequate examined in all fields of human endeavors, Problems and constraints.
1.6 Limitation of the Study
The problems encountered on during this project are:
- Non-Availability of text book
- Financial constrain
- Significance of the Study
Strategy constitutes the vehicular procedures through which an organization attains its goals in the over dynamic business environment. Profitability and growth are among the key objectives of business concerns. Then one would righty believe that a progressive organization must develop strategic towards their achievement.
Merger and acquisition will steam line the enlarged organization, which will run on less administrative and overhead cost than for separate organizations. It will help in recognizing the needs for strategic opinion for corporate productivity.
The Study will help managers using merger and acquisition to create an atmosphere that will enhance effective and efficient achievement of cooperate productivity. It will expose the benefits and growing realization that merger and acquisition can bring to effectiveness and efficient of an organization.
The study will offer policy recommendation to managers in improving the level of corporate productivity and profitability in the Banking Industries.
- Operational /Definition of Terms
Acquisition: Is the situation where companies agree to pool their interest by an exchange of shares, so that the existing shareholder comes together under one entity.
Bank: An institution where one can place and borrow money and take care of financial affairs or a save and guaranteed place of storage for and retrieval f important items or goods.
Business: Comprise of the sum total of all activities involved in the creation and distribution of goods and services in order to earn profit.
Economy: Is a system which tries to balance the available resources of a country through the means of factor of production.
Effect: The measure of the significant or strong influence and intangible effect of one act.
Growth: The creation and the implementation of policies that influence the types, the amount, the timing and economy development.
Merger: Is a situation where two or more separate entities agree to less their individual legal entity to come under one umbrella entity by pooling their management material and labor resources together.
Operation: The action of functioning or being effect is an area of concerned with responsibility.
Merger: Is a situation where two or more separate entities agree to less their individual legal entity to come under one umbrella entity by pooling their management material and labor resources together.
Profitability: The efficiency of a company or industry to make a profit or helpful result in the situation in which the company is producing or making profit.
1.9 Profile of the Inter-continental Bank Plc.
Over the past 26 years, Access Bank Plc has transformed from an obscure Nigerian Bank into a world class African financial institution. Today, Access Bank is one of the five largest banks in Nigeria in terms of assets, loans, deposits and branch network; a feat which has been achieved through strong long-term approach to client solutions – providing committed and innovative advice.
Access Bank has built its strength and success in corporate banking and is now taking that expertise and applying it to the personal and business banking platform it acquired from Nigeria’s International Commercial bank in 2012. The last two years have been spent integrating the business, investing in the infrastructure and strengthening the product offer.
As part of its continued growth strategy, Access Bank is focused on mainstreaming sustainable business practices into its operations. The Bank strives to deliver sustainable economic growth that is profitable, environmentally responsible and socially relevant. At the Beginning (1988 – 2001) December 19, 1988: Access Bank was issued a banking license, February 8, 1989: Access Bank was incorporated as a privately owned commercial bank, May 11, 1989: Access Bank commenced operations at its Burma Road, Apapa Head Office, March 24, 1998: Access Bank became a Public Limited Liability Company, November 18, 1998: Access Bank listed on the Nigeria Stock Exchange, February 5, 2001: Access Bank obtained a Universal Banking License from the Central Bank of Nigeria. In March 2002, the Board of Directors appointed Aigboje Aig-Imoukhuede as Managing Director/Chief Executive Officer and Herbert Wigwe as Deputy Managing Director. The mandate was clear: “Reposition the bank as one of Nigeria’s leading financial institutions within a five year period (March 2002 – March 2007).” This task was perceived by many as impossible given the realities of the Bank at the time. Simultaneously, Mr. Gbenga Oyebode, who brought commendable and useful board experience gathered from some of Nigeria’s leading companies, including MTN Nigeria, Okomu Oil Palm Plc, was also appointed to the Board. The new management team subsequently created a transformational agenda for Access Bank which represented a departure from all that characterized the Bank in the past and became the road map for the conversion of the bank into a world class financial institution.
The focus was to assemble a credible and high caliber management team, introduce a culture of excellence founded on professionalism and integrity
Ensure Human Capital Development. Year 2005, Acquired Capital Bank and Marina bank via merger by absorption and completed integration within 60 days, Netherlands Finance Company (FMO) US$15million Investment in Access Bank listed on the NSE, Access Bank launches suite of wealth management products for high-net-worth customers, Access Bank launches Man Power Business Account, designed to empower SME business owners, the Bank’s flagship retail product, Launched first Nigerian online car leasing service ’Auto online’, First Nigerian Bank to partner the International Finance Corporation(IFC), an arm of the World Bank, for the introduction of the IFC’s Gender Empower Programme, Appointed Primary Dealer/Market Maker for government bonds by the Debt Management Office (DMO), The first Bank in Nigeria to receive US$15 million convertible investment from the IFC, Appointed as a Settlement Bank by the Central Bank of Nigeria.
The primary objective of merger is to strategically position Access Bank plc for long term supervision financially performance, it will lead to an enlarge Access bank Plc that will increase shareholder value or wealth, benefit of this merger including creating wealth, ensure flameless integration contribution to economic development, preserve value, maintain integrity create employment and enhance cost effectiveness.
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