1.1 Background of the study
2.1 Introduction
3.1 Research design
5.0 Discussion implication recommendation
Reference
LIST OF TABLE
ABSTRACT
The study concerned mainly with an investigation into financial distress in banking industries causes and implication. By way of background the study commence with overview of the distress and failures in Nigerian banks.
Available documents on bank failure/distress had shown that distress of financial institutions bank to be precise did not start recently but had long existed even before independent. To identify the main causes and effect of financial distress in banking industry data were collected through the distribution of questionnaires to 80 respondents union bank of Nig Plc and secondly through extensive review of earlier studies written relating to research project topic. Data collected were analyzed and tested using percentage.
The main findings based on the analysis and subsequent test shows that the external environment factors (regulatory constraints economic down turn and political instability) and internal environment factors lack of monitoring experience and poor portfolio management contributed in varying degree to financial distress in banking industry. Based on the findings the researcher made possible recommendations to correct ugly effect recorded as the root causes of financial distress in banking industries in Nigeria
Therefore considering these it will be of great importance to every individual in all aspects of field of life
CHAPTER ONE
1.0 INTRODUCTION
In Nigeria today there is distress in almost the entire environment in industry law enforcement transport communication financial institutions and the host of others.
In other words bank being a people and confidence based industry has being the most pronounced industry that is in distress not only that bank is a place where valuable are kept for safe custody but it is a critical bridge between deficit and surplus between dreams and commerce between theories and industrialization in any economy. It is a cornerstone industry of a nation.
The word distress mean different things to different people but generally it is said to be a state of unhealthy condition.
Bank is said to be distress/failure when it cannot be able to meet with its objective or its obligations due to union and foremost to its customers shareholders and the community where it was established. There are factors that are responsible for the high level rate of banking failure/distress in banking mismanagement insider abuse fraudulent activities of staff capital inadequacy poor asset quality economic factors and others. It is those problems that is of major concern of this project.
Having introduced the issue of distress and failure in companies in Nigeria, it is also necessary to treat the issue of distress and failure in Nigerian banks although banks by statutory legislation are companies yet they are in many ways different four other companies. For one thing they are service companies they are more regulated and monitored than other companies or services institutions or sectors.
By the provision of the Nigerians law, banks and other financial institutions decree No 25 of 1991 section 20 a bank is not to keep fixed assets except as may be required for the normal running of its business. A bank is not to hold much interest (equity) in any other business except in banking business.
A bank is required to have a cash reserve of 80% and a liquidity ratio of 30% . the liquidity that 60 banks were adjusted distressed in 1995. There are also many other distressed bank after that
According to Osuala 1987 “the statement of a research problem serves to elaborate upon the information in the title of the study” this study is concerned with an investigation into the causes and implication of financial distress in banking industry in Nigeria.
Factors that contributes to the woeful collapse’s of banking industry ranges form the external and internal environment factors in which banks operate its business some of these factors are as follows.
This simply means that aim/objectives of the researcher in understanding the study. It is an overview of the study itself and relates very much to its problem and implication.
To this and the objective of this research includes the following.
The scope of the study ie the research work is concerned with an investigation into causes and effect of bank distress in Nigeria Plc Enugu.
Union bank of Nigeria Plc for a century has distinguished itself as a feed banking institution and a major contributor to the economic advancement and development of Nigeria.
The Union Bank Plc was founded in 1894 by a shipping mognole from Liverpool Sir Alfred Jones. The bank commenced as a small operation in the office of Elder Dempster and company in Lagos
It was incorporated as a limited liability company on March 1894 with head office in Liverpool . it started business under the corporate name of bank of British West African (BBWA) with a paid up capital of 12,000 (twelve thousand pounds sterling) after absorbing its predecessor the Africa banking corporation which was established curlier in 1892. the bank was to establish in the banking industry signaled preeminent position in west Africa. In the early years of operations the bank recorded an impressive growth and worked closely with colonial government in performing the traditional functions of a central bank such as issue of spade in west Africa sub-region.
A branch was opened in Accra Gold coast (now Ghana) in 1896 and another in free town Sierra alone in 1898. the second branch of the bank in Nigeria was in the old Calabar in 1900 and two year later services were extended to Northern parts of Nigeria. The bank maintains the largest branch network in the industry. This bank has a net work of 315 branches spread throughout the federation including on in the city of London. The bank also has diversified into a wide range of banking activities and services. These include corporate and retail banking registration trusteeship and insurance brokerage.
To reposition and to take advantage of opportunities in the changing environment the bank embarked on several restructuring initiation in 1957 it changed its name form bank of British for west African to bank west Africa. In 1969 the bank was incorporated locally as the standard bank of Nigeria limited in line with the company decree of 1968. in 1979 and 1991, the name of the bank was changed to union bank of Nigeria limited and union bank of Nigeria Plc respectively .
Union bank of Nigeria is a public liability company. The shares of the bank are duly owned by Nigeria citizens and associations. The manager of staff pension fund holds up to 5% of the issue share capital of the bank. It has two hundred and nine thousand nine hundred and thirty three shareholder (209,933) the initial capital was twelve thousand pounds sterling (7) 12,000 the banks share capital grew to six hundred and fifty thousand three hundred and thirty five billion naira (N650,385) the banks total asset based was one hundred and eighty thousand five hundred and fifty three billion naira (180,553) while its deposit base stood at one hundred and twenty seven thousand two hundred and thirty billion naira ( 127,230) its market capitalization told at eighteen thousand one hundred and Ninety billion naira (18,190) ie thirteen naira ninety-nine kobo (13.99) per share its capital adequacy is 18.8% the bank has its headquarter located at Samuel Ashaba House 35 Marina PMB 5216 Lagos. This bank ahs three hundred and eighteen (318) braches. It has a staff strength of six thousand one hundred and eighty two (6.182) throughout the country. At Enugu office the staff strength is put together as four hundred and eight-eight (488) comprising of 26 management staff 336 senior staff and 126 junior staff.
The following question has been selected as a guide to the researcher in the research work.
Bank failure and bank distress has been a topical issue in Nigeria over since the collapse of the national bank of Nigeria in the early 1990s and has remained unresolved till the inception of manger in all the banks throughout Nigeria. ever before them the yearly increase in the number of fallen unhealthy banks and its concomitant damage to the depositors confidence in
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