ABSTRACT: In the banking industry, effective implementation of banking rules and regulations, organizational policies and procedures is very important in other to achieve the goal of the organization. In other to achieve this, managers, operators of the banking industry will sit up for their responsibility in bringing about the much desired goal where this fails, distress crept in aid this is followed with loss of public confidence in the industry because they cannot meet the needs of depositors. This work is designed to bring about the causes and possible solutions to this dreaded diseases. This work will equip the managers to face the challenges ahead in other to build a more write banking industry that will stood for the test of time.
PROPOSAL
The research work is centered on management crisis in the banking industry. The main objective of this research is to bring out the salient issues that brought about this crisis. These issues to be researched on are the causes, solutions and recommendation of management crisis in the banking industry. The project is expected to span through chapters one to chapter five.
Chapter one: in this chapter, the topic will be introduced, highlighting the purpose, scope of the project which will help in understanding the objective of the project. However the problems of the research work on the subject mater would be discussed.
Chapter two: this chapter will re-ray felated literatures on the subject matter and other journals. The review of this literatures will go a long way in solving the research problem.
Chapter three: this chapter entails the method to be used in data collection, analysis, location and sources.
Chapter four: in this chapter, presentation and analysis of the instrument used and the interpretation of data should be discussed.
Chapter five: this is the final chapter which will contain the summary of the findings on distress in the banking industry, conclusion and recommendation.
In all this chapter will renew what is required in establishing a sound banking industry which will win back the people confidence.
TABLE OF CONTENT
CHAPTER ONE
1.1 Background to the study
2.1 History of distress in Nigeria
3.1 Research design
4.1 Data analysis
5.1 CONCLUSION
BIBLIOGRAPHY
REFERENCE
INTRODUCTION
The first banking activity in Nigeria was carried out by African Banking corporation in 1892. this was followed by the first bank in 1884 incorporated as Bank of British west African (BBWA). According to porter (1980). After the establishment of first Bank, Union Bank came on stream in 1917 as Barclays Bank.
The first indigenous Bank, according to Ndukwe (1994) was established in 1929 and that was the emergence of DISTESS in the Nigerian Banking sector. This period also stressed rapid growth in number of Banks in Nigeria.
Between 1951 and 1952, Ndukwe (1994) asserted that a total of 16 banks were established.
Onyima (1994) also observed that the increases was effectively matched by high rate of failure such that by 1954, 21 out of 25 banks had failed.
The salient causes for this failure are;
The 1952 Banking ordinance was the only cause attributed to the government and it was this ordinance that brought about this failures in banks. The reason being that most indigenous banks could not meet the demand of this ordinance and they had no other option than to close down.
However, since 17th of March, 1959, when central Bank ordinance and independence in 1959, government had through direct support mechanism, ensured that the banking public was no longer exposed to th hazards of bank failures.
The introduction of structural adjustment programme (SAP) in 1986 and the friancial system in 1987 Ebhodaghe (1903) noted that since that time, there has been a phenomenal increase in the number and type of financial institutions leading to staff competition in the industry. This growth of Banks gave this impression that banking is an all was business as all types of investors with fund to throw about established and inconpetant and inenperienced hands assumed serior positions, people without very clean ordential joined as one.
According to the Banker (1994), these entrants prepared the ground for this virus infections known as ‘DISTRESS” which the monetary authorities are correctly battling to ensure it does not spread to other Banks.
Onyima (1994) admitted that the now beed financial after the deregulation took advantage of the premises rules incept regulators, firstling depositors and in utter disregard of the elementary test of solvency and going concern concert.
He further said that government economic policy shifled emphasis from direct support of banks to perent failure to one of protecting the deposits of customers, especially the small scale depositors. It is in support of this that the “National Deposit Insurance Corporation” (NDIC) was established under decree no 22 of 1988. one can reasonably assure that government knew that most banks or some Banks will collapse as a result of (SAP) and the deregulation of the financial system and that is why it creasted (NDIC) National Deposit Insurance Corporation.
In addition to the development noticed since 1986, the Banker (1994) adds that the general macro economic instability resulting in apredicatable monetary policy environment has equally played a magnificent role in bringing about distress in Banks also that the incessant mopping up of excess liquidity through the assurance of stabilization securities has creased liquidity crisis in the system and has adversary affected some banks.
The laminating effect of the events aforementioned is the birth of distress in the banking sector which according to Ebhodagher (1993) surfaced in 1980 after the withdrawal of beasury fund from banks. From then, one can deduce that the causes of distress or the factors that gave rise to distress in the banking sector is sponsored partly by the regulation / supervisory authorities and the operators of these banks, sometimes the depositors or the debtors of such banks, are blamed. It could be as a result of this observation that Ebhodaghe (1993) said that the incident of banks distress is not peenliar to Nigeria. It occurs in various Economics of the world. In support of this Onyima (1994) observed that there has been.
However, the Banker 1994 admitted that historically, we can ensure that phase as another in the enduring growth of the banking sub-sector that will definitely come to pass. Thus the uproar and various scape-goatism being generated by the palaver should not arise.
Ebhodaghe (1993) observed that the rise in the number of distressed Banks has increased public awareness of trouble in the Banking system and has heightened general interest in instructions that are experiencing difficulties. He frowned at a situation where people rush to a Bank to with draw their money once such a bank is identified as DISTRESS.
This, Ekezie (1994) observed has the effect to exacerbating the banks deteriorating position and militates against the authorities efforts aimed at reviving such banks. This illustrates how distress leads to loss of public confidence in the banking sector.
At this junction, it is pertinent to define what a DISTRESSED BANK is as Ekezie (1994) observed that most Nigeria do not know what is means for a bank to be distressed. “He says that distressed bank is a sick and or liquidating bank or with a precarious financial position overtime”. The supervisory / Regulatory Monetary authorities usually define a distressed bank as one which has a severe financial operational and managerial weakness.
It seems that authorities are fighting a losing battle in remining the distressed banks. For instance in 1991, 8 cergho) banks were identified as distressed and five (5) were taken over in 1993 and these are African continental Bank (ACB), Pan African Bank (PAB), New Nigeria Bank (NNB) and Mercantile Bank. Earher, the National bank of Nigeria was taken over in 1992 as those taken over in 1993. Between Januarys to September 1994, four (4) banks were liquidated. They are financial Merchant Bank, capital Merchant Bank, Alpha Merchant Bank and United Commercial Bank.
The problem of distressed Banks in Nigeria is obvious by an intractable are but not insurmountable. If the various parties involved, operators, depositors and regulators should became aware of their roles in solving this problem, distress in banks will become a thing of the past in a couple of year to come.
This research work seeks to bring to light the various roles of the parties involved so as to solve this problem.
Banks are very important in the life of a nation. According to Umoh (1994), the banking system plays the roles of the engine of growth for the economy and this is supported by Bello (1993), who said that banks are the “heart of the economy”. Thus, any problem in the banking industry of great concern to all as observed in (NDIC) Nigeria Deposit / Insurance corporation (1991). Annual report and statement of account.
The banking public are concerned because their deposit is at state and authorities are concerned about the stability, safety and soundness of the banking system and its overall effect on the economy as a whole Ekerie (1994) noted.
It is against this background that the researcher seeks inter-alia to address these problems.
There are numerous problems that have been arisen as a result of the crisis in the banking sector and this work will accept to solve or provide solution to this problem.
Distress in banking system is a serious problem which affect every aspect of the economy.
The purpose of this study is to;
Distress came into existence in 1989 after the withdrawal of beasury funds from banks. Since then more banks have joined the bandwagon of distressed banks. The study there
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