EFFECT OF MERGER AND ACQUISITION ON EMPLOYEE MORALE

EFFECT OF MERGER AND ACQUISITION ON EMPLOYEE MORALE (A CASE STUDY OF FIRST CITY MONUMENT BANK (FCMB), CALABAR)

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The Nigerian banking industry has witnessed tremendous changes and expansion since the mid 1980s. Unfortunately the growth and expansion in the sector are not the manifestation of a sound or vibrant banking system known anywhere in the world. Most banks in Nigeria are characterized by inadequate capital base, poor services, huge rate of bankruptcy, and lack of management expertise, bad debt syndrome and greater exposure to fraud. The central Bank of Nigeria on July 6th 2004, announced the recapitalization of banking sector from N2 billion to N25 billion with eect from 1st January 2006. This was with a view to make the sector internationally competitive, sound and improves its ability to provide credit to all the productive sectors of the economy. In order to meet this obligation, banks embarked on strategies of merger and acquisition, floating of new shares and so on. At the end of the exercise, 25 new banks emerged (Olaitan 2006).Managing and maintaining employee morale is one of the most important functions of eective
HR. The cliché that a happy worker is a productive worker is a cliché for a reason. While it may be more accurate to say that an unhappy worker is an unproductive worker, every HR professional knows the value in good staff morale.
As a result of the bank recapitalization process that commenced from 2005, commercial banks over a hundred had to close shops or merge with another bank to still be in business. The effects of mergers and acquisitions in the banking industry of Nigeria on employee morale can be significant if the reorganization of the business is not handled effectively. During any merger or acquisition eort, there are at least two groups of employees involved, oen coming from organizations with distinctly different cultures and styles. Learning a new culture can be challenging, but is especially so when employees are faced with uncertainty about what the future may hold and whose job is on the chopping block. Bank recapitalization which was effective
from 2006 is aimed at making Nigerian banks stronger and better in-order to finance all sectors of the economy including the major drivers of the economy-Small and Medium Scale Enterprises. This effort
to stabilize the banking industry of Nigeria and make it financially strong and healthy will definitely affect
employee morale and productivity-either positively or negatively

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