Mergers and Acquisition Option for Bank Capitalization in Nigeria.

Topics: Bank, Capital requirement, Mergers and acquisitions Pages: 48 (12756 words) Published: January 25, 2011

A growing phenomenon in modern company management is the different type of changes affecting the structure of these companies, the issue of mergers and acquisition is a relatively recent development in Nigeria. These structural changes may take the form of scheme of arrangement, amalgamation, take-over, merger and acquisition. These are all commercial term or forms of business combination that indicates operation involving substantial changes in the ownership, construction or capital structure of one or more companies. Mergers and acquisition have played an important role in the external growth of a number of leading companies all over the world. Undoubtedly, the combination of businesses offers an alternative to internal expansion through the acquisition or development of business property on a piece meal basis. Mergers and Acquisitions is a general term that encompasses all forms of combination of previously separate business entities. It commonly occurs when a corporation and one or more incorporated or unincorporated business are brought together into one accounting entity. The single entity carries on the activities of the previously separate, independent enterprises. This emphasis the single entity and the independence of the combining companies prior to their integration. Although one or more of the combining companies is bound to lose their separate legal identities In business combinations, bringing their business resources and operations under the control of a single management team brings businesses that were hitherto separate, together into one economic entity. Such controls occurs in the combination of businesses in which i.One or more companies become subsidiaries of another company. ii.One company transfer its net assets to another, or

iii.Each company transfers its net assets to a newly formed company, which exists solely for the purpose. 1.2STATEMENT OF RESEARCH PROBLEM
There has been continuous debate over the relevance of consolidating the banking sector. Different quarters have argued in favour and against the implication fo merger and acquisition option for banking sector. Therefore, this study attempt to address the issue of mergers and acquisitions in banking sector. The question that arises here are; and the study seeks to find answer to the following questions. 1.What are the benefits of merger and acquisition to Nigerian banking system? 2.What is the operating result in mergers and acquisition, in Nigerian Banking System? 3.What are the suggestion to enhance the application of mergers and acquisition option in Nigeria banking system? This study seeks solution to the above question and is spurred towards the investigation of the various avenues through which merger and acquisition affects the banking capitalization using UNITED BANK FOR AFRICA (UBA) and STANDARD TRUST BANK PLC (STB) as a case study 1.3OBJECTIVES OF THE STUDY

The pertinent problems highlighted above not withstanding certain trends towards merger and acquisition of bank and other business organizations seem to have been established. The Central Bank fo Nigeria (CBN) governor in his address announced that the purpose for the drastic cincremetn was to adopt appropriate frame work as well as a comprehensive incentive package to facilitate mergers and acquisitions in the banking sector as a crisis resolution option and to promote the sound, stability and enhance efficiency in the banking system. In case of United Bank for Africa Plc, the achievement of a level of effectiveness required in the merger application must have resulted from proper planning put in place to harness the techniques: they have worked in the bank mergers and acquisitions. The objectives of the study therefore are

1.To examine the benefits of the merger and also the pre and post mergers activities of both the acquiring bank and the acquired bank 2.To suggest solution where possible results towards a better...
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