MERGERS AND ACQUISITIONS IN THE NIGERIAN BANKING INDUSTRY. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
The study was designed to examine mergers and acquisitions in Nigrerian banking industry. The need to carry out this study rose from the challenges faced by Nigerian banks despite the reduction of banks from the end of 31st December 25. These changes faced by banks in the country have made researchers to questioin the effeiciency of the consolidation of banks in Nigeria.
The explorative research method was used for this study. Data was collected from jornals, textbooks, conference papers and the internet. The frindings reveals that the consolidation (mergers and acquisitions) activities in Nigerian did nto meet the desired objective of liquidity, capital adequate and corperate government, which resulted tomore troubled after the consolidation. On the basic of this, the study recommendation among other that corruption insiders abuses must be minimized in the banking scetor for the country to deriver thre benefits of mergers and acquisition
Background of study
Mergers and acquisitions have emerged as a strategic tool for achieving corporate expansion and growth. Analyses have the banks to benefit from new business opportunities that would be created by change in the regulatory and technological environment.
Aluo (2010) argue that Nigerian banks adopted different strategies to achieve the stipulated minimum capital base of N25 billion during the consolidation of banks in 2004 and 2005 which include mergers and acquisition. He further opines that mergers and acquisitions represent the widely used corporate strategy to penetrate into new market and new geogr4aphi regions, gain management expertise and knowledge or allocate capital. The question why mergers and acquisitions occurs has multiple answers.
The often discussed reasons are synergy, agency costs due to self-acquirer managers, discipline of target management and managerial timing of high market valuation. It is also noted that mergers and acquisitions in the banking industry are aimed at achieving economies of scale and scope. Mergers also help in the diversification of products which help to reduce risk us well. Over the years, the Nigerian banking industry has experience progressive banking reforms and intervention by the regulator.