Appendix
Table 2.1 Classification of banks based on the rating system
Table 2.2 Approved banks: how they merged
Table 3.1 Classification of department / section
Table 4.1 Distribution of total respondents
Table 4.1.1 Educational qualification of the respondents
Table 4.1.2 Distribution according to department / section
Table 4.2 Analysis of question one (1)
Table 4.2.1 Analysis of question of two (2)
Table 4.2.2 Analysis of question three (3)
Table 4.2.3 Analysis of question four (4)
Table 4.2.4 Analysis of question five (5)
Table 4.2.5 Analysis of question six (6)
Table 4.2.6 Analysis of question seven (7)
Table 4.2.7 Analysis of question eight (8)
Table 4.2.8 Analysis of question nine (9)
Table 4.2.9 Analysis of question ten (10)
Table 4.3.1 Analysis of hypothesis one (1)
Table 4.3.2 Analysis of hypothesis two (2).
Prior to the recapitalization and reformation in the banking industry by Central Bank of Nigeria (CBN), under the leadership of Prof. Charles Soludo, our banking system has been in disarray. It was engaged by incessant distress and failure. The problem of bank distress and failure has pervaded the Nigerian banking sector in recent time to such an extend that the problem has become a big challenge to regulatory and supervisory authorities, the government, the banking management and the general banking public. This research was focused on the analysis of factors in the banking industry in Nigeria. Thus the researcher investigated the poor loan management practice and other inter-related factors which inter played to give rise to the distress condition in the bank. Primary data were obtained and subjected to rigorous analysis using percentage as a tool of analysis. Based on the result of the analysis of findings, the following conclusions were reached. That merger and acquisition will help in prevention 0f distress in the banking sector. That bank distress and failure in the banking sector affect other sector of the economy.
Bank distress means different things to different people. To some people a bank fails only when it ceases to operation even if it has not been declared liquidated officially. In a broader context, a bank is said to have failed if it has not succeeded in achieving any of the objectives for which it was established. Thus a bank a failure not only when it ceases operation, but also when it cannot meet any of its objectives. These obligations were due first and fore most of its customers as well as to its shareholders and even the community, where it is established. The issue of distress in the financial system is one of the major problems facing the country at this time. This problem was followed with the sharp increase in prices after the introduction of Structural Adjustment Programme (SAP) in 1986, under the administration of general Badamasi Ibrahim Babangida. The subsequent rise of wonder bank to cater for high numerical interest rate expectation and the increase in the number of financial institutions.
In the absence of proper regulation and supervision the failure of banks did not come as a surprise. Most of the instructions were running pyramid schemes meant only to benefit the owner and staff. The more recent problem is distress among licensed commercial and merchant banks. Distress is here regarded as being characterized by insolvency and bankruptcy.
In summary, financial sector distress can be described as a situation in which a sizeable proportion of financial institutions has abilities exceeding if the market value of their asserts, which may lead to runs and other portfolios shifts and eventually collapse of the financial system. Consequent upon this, the health of the financial system is currently monitored to ensure that development in the sector do not compromise the achievement of the macro-economic policy goals.
Albeit, the bank distress and failure can be classified into two main categories viz: External and internal causes.
ACCORDING TO GIWA (1989:65)
Mergers and acquisition must be seen as available means of siring binds from serious financial distress and providing such business with new management and better access to new financial resources .
Such banks in distress are this provided with great opportunities which they could hardly obtain on this own within same time scale.
In high of the above, the time behind any merger acquisition bib can be broken down as follows:-
(i) The need to enjoy economics of scale
(ii) To increase market power
(iii) To avoid the firms failure and sure of continuity
(iv) To build an empire
(v) To gain promotional profit
(vi) To expands production without price reduction
(vii) To acquire capacity at reduce price.
(viii) To obtain monetary economics off scale
(ix) To use complementary resources
(x) To spread risk by diversification
(xi) To merge because of tax advantages
However, thee reasons enumerated above may or may not be present in all merger consideration I situation. For the purpose of this work, merger is viewed from the point of defensive perspective. Which is motivated by the desire of financial institutions to serve in an cling , desire of financial institution to survive in as ceiling economy where survival is important.
In this research study the researcher has been worried by the persistent
distress of banks which do lead to the lose of money by poor depositors and it directs impact on economic development of Nigeria. From the above, the following statement of problems emerged.
1.3 OBJECTIVE OF THE STUDY
If a researcher talk of objective it simply stresses on what the researcher wants to achieve in the research. From this research under review, the objectives are as follows÷
1. To identify the major causes of distress in Nigeria banking sector.
2. To know if there is anything to be done to reduce bank distress Nigeria banking sector.
3. To verify the problems caused by bank distress.
4. To find out the sufferers of bank distress.
5. To know if merger and acquisition is the solution to bank distress.
6. To know if bank distress is causes by internal factors or external factors or both.
1.4 RESEARCH QUESTIONS
1. What are the major causes of bank distress in Nigeria bank sector.
2. What are the things to be done to reduce bank distress in Nigeria banking sector.
3. What are the problems caused by bank distress.
4. Who are the sufferers of bank distress.
5. Do you think that major and acquisition is the to bank distress.
6. Is bank distress caused by internal factor or external factor or both.
1.6 THE SCOPE OF THE STUDY
This study limited of the scope of the study ie area of content coverage is base on newly merged banks ie standard Trust bank plc. United bank for African and continental Trust bank. The bank visited for information enquires and data collections are all in Abakaliki Ebonyi State.
1.7 SIGNIFICANCE OF THE STUDY
The important and significance of this study cannot be over emphasized when considering the beneficiaries, when this research work must have been completed. Those expected to benefit from this work and the type or kind of benefit to be derived, are discussed below.
Banks: at the end of this research study it is expected and aimed that the rate of bank failure and distress in our Nigeria banking sector will be ameliorated. That’s bank performance and operation will improve tremendously, this will be achieved when a distress bank has agreed to merger or to be acquired by a bigger firm. By so doing the new entity will enjoy economic of scale, bringing about reduction in their liabilities and eventually increase their profitability forecast.
The shareholders: the shareholders will stand the chance of benefiting from the success of this work by knowing and viewing the banks that has weak capital base and strong capital base. Merging of distressed bank or financial institution will improve the shareholders wealth maximization of the shareholders when the weak bank or institution is consolidated, the performance and management improves, thereby increasing the profit index and when expected and huge amount of profit is made dividends are declared to the shareholders will be able to depict among banks, determine the quality and number of shares to be held in such banks, which will in turn generate Return On Investment (ROI) and Capital Employed (CE).
Employees: these are the workers that engage in the day to day activities and operation of the bank. When and acquisition takes place, the employees will be motivated to work by surety and salary. Fringe benefit and other invaluable training that will be received in the cause of the execution of their distinguished duties. As a matter of fact, promotion will be enhanced by putting the best and application of technical-know of the employee.
Media platform: there will be an increase in advertising spending due to a need for communicate infection about the merging banking group.
Customers: customers will have fewer banks to chose from due to the reduced members of the bank that will exist in banking sector. There will be more competition, more value for money and better products, the means that customers will be
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