The Merger and Acquisition of Nigerian Banks From 2007 Till Date By ARTICLES | Published: JUNE 11, 2013 The Merger and Acquisition of Nigerian Banks From 2007 Till Date

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The Merger and Acquisition of NigerianBanks From 2007 Till Date

y ARTI CLES | Published: JUNE 11, 2013

The Merger and Acquisition of Nigerian Banks From 2007Till Date

Merger and Acquisition of Nigerian Banks – Merger according to Oxford

Advanced Learner’s Dictionary 7 ed. Is the act of joining two or more

organizations or businesses into one. While acquisition is something that

somebody buys to add to what they already own, usually something valuable.

In his definition of the term (Gaughan 2007) defines merger as a combination of

two or more co operations in which only one cooperations survive. He also states

that the acquiring company assumes the assets and liabilities of the merged firm.

The term merger then, refers to the combination of two or more organizations

into one larger organization such actions are commonly voluntary and often

results to a new organizational name. This is usually done by combining the

names of the original organization, usually the one that has the largest share orownership. An example is seen in Table 1 below, where the bigger or sound firm’s

name overrides the constituent names.

cquisition, on the other hand is the purchase and total takeover of all the

property (assets and liabilities) of the purchased institution. From this definition

rendered so far, one can deduced that the two terms can be used interchangeably

but that should not compromise the sharp difference between them.

MERGER AND ACQUISITION OF NIGERIAN BANKS – ITS IMPACT

ON THE NIGERIA BANKING INDUSTRY.

On the impact of merger and acquisition in the banking industry and in

economic growth kaur and kaur (2010) noted that mergers and acquisition in the

banking industry are aimed at achieving economies of scale and scope. This is

because as the size increases, the efficiency of the system also increases.

Banking Industry in Nigeria, has undergone a lot of changes and transformation

in policies and operations, courtesy of merger and acquisition that was made

possible with the coming of Professor Charles Soludo, as the Central Bank of

Nigeria (CBN), Governor and the subsequent announcement on July 6, 2004 that

the minimum capital requirement base of banks in the country be moved up from

the previous two (2) billion naira to twenty five (25) billion Naira ; citing that

cases of bank failure in the 1990’s and early 2000’s was the major motives for

this change and subsequently, that the deadline for the final phase of the

consolidation should be December, 2005.

This announcement is the bedrock of the strong and efficient bank(s) that we

witnessed lately. Which is due to the mergers and acquisitions in the industry, as

th

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it led to a tremendous growth in the economy. Though, it is not complete or

perfect outing for the then Governor, as with his leaving office, and New

Governor in place, there is indication that some of the new banks is not perfectly

in good condition as noted by Sanusi (2010) however says neither the industry

nor the regulators were sufficiently prepared to sustain and monitor the sectors

exclusive growth. And thus, the recent acquisition of the unsound bank(s) by a

more viable ones.

Tables below shows a thorough breakdown of the merger and acquisition of

Nigerian banks that have taken place since the tenure of Professor Charles Soludoto the incumbent (CBN) Governor, Mallam Sanusi Lamido Sanusi which saw the

previous 89 banks before 2005, coming down to 25.

Table I (Merger and acquisition of Nigerian Banks in the early phase

2004 and 2005)

S/NO NEW BANKS CONSTITUENT MEMBERS

1. Access Bank PLC Access Bank, Marina Intl. Bank

and Capital Bank Intl.

2. Afribank Nig. PLC Afribank Plc and Afribank lntl.(Merchant Bank)

3. Bank PHB Plc. Plantinum Bank Limited and

Habib Nig. Bank Limited.

4. Diamond Bank Plc. Diamod Bank, Lion Bank,

Devcom Bank Ltd.

5. Fidelity Bank Plc Fidelity Bank, FSB Intl. Bank,

Manny Bank.

6 First Bank of Nig. Plc First Bank Plc, MBC, Intl Bank

And FSB (Merchant bank)

7 Equational Trust Bank

PLC

Equational Trust Bank Ltd and

Devcom Bank ltd.

8 First city monument

Bank Plc

First city moment bank, coop

Dev. Bank, Nigeria-American

bank and Midas Banks

9 First Inland Bank Plc First Atlantic Bank, Inland Bank,

Nigeria Plc, IMB Intl. Bank PLC

And NUB Intl. bank.

10 IBTC Chartered bank

plc

IBTC, charterd Bank plc and

Regent Bank PLC.

11 Intercontinental Bank

plc

Citizen international bank, ACB

international bank guidance

Express bank, omega bank trans.

12 Oceanic Bank Intl. plc Oceanic Bank intl. bank plc and

intl. trust bank.

13 Sky Bank plc Prudent Bank Plc, Bond Bank

Ltd, Reliance Bank Ltd,

Cooperative Bank Plc And ETB

intl. Bank ltd.

14 Spring Bank Plc Citizen Intl. Bank, Acb Intl.

bank guardians Express bank,

onga bank. Trans. Intl. bank,

and Fountain trust bank.

15 Sterling Bank PLC Trust Bank, Afica Ltd. NBM

Bank Ltd, Magnum Trust Bank

NAL Bank Plc and indo-Nigeria

Bank.

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16 Uited Bank for Africa

PLC

United bank for Africa PLC,

standard trust bank plc, and

continental bank

17 Union Bank of Nigeria

Plc

Union Bank of Nigeria Plc,

Union Merchant Bank Ltd Broad

bank of Nigeria Ltd and

Universal Trust bank Nigeria

Plc.

18 Unity Bank Plc Intercity Bank Plc, FirstInterstate Bank Plc, Tropical

Commercial Bank Plc,

Center-Point Bank Plc Bank O

Fthe North, New Africa Bank,

Sociate Bankcare, Pacify Bank

And New Nigeria Bank.

19 Wema Bank PLC Wema Bank PLC and National

Bank of Nigeria LTD

21 Ecobank Ng. Plc

22 Stanbic Bank

23 Standard Charted bank

24 NIGERIA INTL. bank

25 Guaranty trust bank.

As earlier pointed out, some of the banks in Nigeria after the deadline of 2005,

was found to be unsound and inefficient. Table 2shows the distressed banks and

the new bank that acquire them.

Table 2

S/No Distress Bank New Bank that acquired them.

1. Afribank plc Mainstreet Bank Ltd

2 Equatorial Trust bank Sterling Bank Plc

3 First Inland bank First city Movement Bank

4 Intercontinental Bank PLC Access Bank PLC

5 Oceanic Bank PLC Ecobank Nigeria PLC

6 Spring Bank Enterprise Bank LTD

7 Platinum– Habib Bank Keystone Bank LTD

8 Union Bank PLC Owned by African Capital Alliance C

Table 3 below, listed the current number of banks in Nigeria, which stood at 21

from the previous 24 after the mergling of stanbic bank and IBTC charted bank

plc. And the restore of Savannah Bank license.

Table 3

S/NO EXISTING SOUND BANKS

1 Access Bank Plc

2 Diamond Bank Plc

3 Fidelity Bank plc


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4 First bank plc

5 First city monument Bank plc

6 Sky bank plc

7 Stering Bank plc

8 United Bank Afica plc

9 Unity bank plc

10 Wema Bank plc

11 Ecobank plc

12 Zenith bank plc

13 Standard chartered bank

14 Nigeria Intl. Bank

15 Guaranty trust bank

16 Enterprise Bank Ltd

17 Keystone bank ltd

18 Union Bank Plc

19 Mainstreet bank ltd

20 Savannah bank Nig.

21 Stanbic-IBTC Bank Nig. LTD

MERGER AND ACQUISITION OF NIGERIAN BANKS – SUMMARY

AND CONCLUSION

The successful recapitalization of the rescued banks in Sept., 2011 has

significantly engendered economic growth and development as a result of the

soundness, healthiness and stability achieved by the entire system.

With this development, the total number of banks in the country is expected to

reduce from 24 to 20 but with the inclusion of Savannah Bank, which its license

revoked sometimes ago has been lifted and thus, bringing it to 21 banks

presently.

According to the central Bank of Nigeria (CBN), “Banks operating in the country

are now sound, from a capital perspective following the exercise the apex bank

revealed that the average capital adequacy ratio (CAR) of all the banks operating

in the country rose significantly to 17.12 percent, after the recapitalizationexercise” .

It also revealed that the average of the lowest capital of all the banks in the

country currently stands around the regions of 10.69 percent while the highest

stands at an average of 41.23 percent.

CONCLUSION

Indeed, mergers and acquisition globally had resulted in more efficient

banking systems, just as an efficient banking system contributes extensively to

higher growth in any country. And in the case of merger and acquisition of

igerian banks, Nigeria has benefited tremendously from the move to

consolidate the banks; and the mergers and acquisitions process. Though, the

problem of mergers and acquisition is never underestimated but the advantage so

far is beyond imagination.

ote

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« The Effects on the Ban of Sale of Handout by

ecturers

The Effects of Corrosion on the Environment »

See: This Day Newspaper: Nigeria: new Shape of the Country’s Banking Sector.

12 October 2011.

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10 Comments

aina

Posted February 28, 2014 at 11:54 pm | Permalink

Waoo…. Keep it up

Reply

Titilayo

Posted March 4, 2014 at 9:52 am | Permalink

Great Blog.


7 24/11/2015 13:32


6/7

Reply

Aishat

Posted March 13, 2014 at 8:54 am | Permalink

its ok

Reply

Obatomi Olorunshola Theophilus

Posted July 28, 2014 at 3:34 am | Permalink

In addition, Access bank plc has now acquired Intercontinental bank plc

_2013.

Reply

Aishat

Posted July 30, 2014 at 9:58 am | Permalink

Nice one, more of it please

Reply

Adelusi Taiwo

Posted January 20, 2015 at 4:34 pm | Permalink

Helo Sir more grease to your elbow,Well done. B4 the 1st merger and acquisition

2004/2005, there was global bank. What was its position after. Tanx

Reply

Awotunbo Adeolu

Posted April 2, 2015 at 5:15 pm | Permalink

very useful

Reply

Yatu Julius

Posted May 26, 2015 at 11:39 pm | Permalink

It Is A Nice And Interesting One. I Found It Helpful To Me, Pls Keep It Up!

Reply

Akinlade Michael Babajide

Posted June 13, 2015 at 7:43 pm | Permalink

pls do u know the recapitalization base of merchant bank in Nigeria (nationally,

regionally),the mode of operation of CBN and who is financing CBN

Reply

MICHAEL JUMBO

Posted June 23, 2015 at 5:24 am | Permalink

I seriously interested in details of the merger acquisation between Ecobank PLC and

Oceanic bank PLC. Do you have access to research work in that direction of further

access to such materials.

Please contact me on 07032792626. Your services will be paid for.

Thank you

Reply


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The Merger and Acquisition of Nigerian Banks From 2007 Till Date By ARTICLES | Published: JUNE 11, 2013 The Merger and Acquisition of Nigerian Banks From 2007 Till Date