project investigated the "Impact of Merger and Acquisition of Strategies
on Employees Behaviour" using FCMB Plc as case study.
study attempt to provide orderly framework for analyzing the effect of merger
and acquisition on the profitability and survival of bank in Nigeria.
study used primary data, which was collected through the administration of
questionnaire. Data collected were tested vide the Chi-Square statistical
technique. Specific findings from the study shows that employees behaviour is
an essential part of merger and acquisition and that human resources issues
should be given adequate emphasis throughout the process of consolidation. The
study recommends that central bank of Nigeria should work towards the
establishment of an asset management company as an important element of
distress resolution. And that rehabilitation and effective management of Mint
to meet the security and printing need of Nigeria, including the banking system
which constitute over ninety percent of the mint's business.
TABLE OF CONTENTS
Chapter One: Introduction
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Purpose of Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope of Delimitation
1.8 Definition of Terms
Chapter Two: Literature Review
Meaning of Merger and Acquisition
Types of Merger and Acquisition
Mergers and Acquisition the
Human Resources in the Nigerian
induce by banks Consolidation to Nigerian Deposit
Analysis and Its Implication for Strategic Planning In
Chapter Three: Research Methodology
Area of Study
Population of Study
Sample and Sampling Techniques
Instrument for Data Collection
Method of Data Analysis
Chapter Four: Data Analysis,
Interpretation and Presentation
4.2 Bio- Data of Respondents
4.3 Response to the Problem Area
Test of Hypothesis
Chapter Five: Summary, Conclusion and
Implication of Finding
5.5 Limitation of the Study
TO THE STUDY
review of developments in the Nigerian banking and financed system indicates
that the banking sector has undergone remarkable changes over the years, in
terms of the number of institutions, ownership structure, as well as the scale
of operations driven largely by the consolidation of the financial sector in
line with the global trend. As at the end of March 2004, insured banks stood at
89 with various sizes and degrees of soundness. The Central Bank of Nigeria
(CBN) rating of all the banks classified 62 banks as sound/satisfactory of the
banks did not render any returns during this period. The sector generally
enjoyed a stable operating environment until July 6th 2004, when the
announcement of the CBN which introduced a major policy initiative effective
foregoing not withstanding, the market share based on the industries total
asset distribution, shows that the sector was highly concentrated with the top
ten banks accounting for more than 50% percent of the total asset. Many of the
89 banks are small in size and unable to effectively compete with the bigger
ones. Many of the small banks are closely held and are played by various
problem and constraint which includes: Low capital base, weak corporate
governance as manifested in meddlesome interference in management function,
poor risk management, unethical and unprofessional practice, Mal-adaption of
the banking industry as bank were not addressing the core needs of the
environment low confidence in the Nigerian banking system, unethical
competition leading to some banks covertly de-marketing the competitors, late
or non- publication of annual account that obviates the impact of market
discipline in ensuring banking soundness, over-dependence on public sector
deposits, neglect of some and medium scale enterprises by the system,
insolvency as evidence by negative capital adequacy ratio and shareholders
funds that had completely eroded by operating loss, over-trading, high
incidence of non-performing loans, weak management, inaccurate report and noncompliance
with regulatory requirements, gross insider abuse, credits, neglect of small
and medium class savers, ethnic misconduct, falsification use, returns by the
banks to the central bank, unprofessional use of female staff in some banks in
the name of "Marketing", high lending rate. From the foregoing
analysis, the Nigerian banking system faces enormous challenge which if not
addressed urgently could snowbell into a crisis in the near future. In view of
the identified problem of the Nigerian banks, the Central Bank of Nigeria (CBN)
which serves as government agency and the government as the custodian of the
masses. Discovered the unethical behavioural disposition of Nigerian banking
industries, from time past, the regulatory and supervisory authorities had
found it difficult in trying to get bank to always comply with regulatory
guidelines. Some banks were even suspected to be investing huge resources in
exploiting every available loophole in the regulatory guidelines. That bank
which religiously towed the path of honour appeared to be fighting a loosing
battle. It seems to be a case of "if you could not beat them, you join
them", there is a need to take an imperative step to eradicate the
draconian situation in the banking industry. This, however, led to the decision
made by the CBN through it governor, on the 6th of July, 2004, at the special
meeting of the bankers committee, the governor, Professor Charles Chukwuna
Soludo rolls out new capital base among other things which finalized at N25
billion at minimum capital base with full compliance before the end of December
2005. this led some of the bank to the banks to go into Initial Public Offer
(IPO), Private Placement etc. with the minimum capitalization of N25 billion
banks are continually flooding the capital market to raise additional capital
funds either to meet up with the minimum requirement or to position themselves
for Merger and Acquisition which is currently taking place within the banking
industry in Nigeria, are here to stay and should change the face of the banking
sector beyond recognition. The consolidation deadline on 31St December, 2005
ultimately became a reality.
then, doubting " thomases" were still believing that, it could be
extended. They were caught unaware, on the other hand, very serious institution
believed from the on set that the level of capitalization required was
apparently a Herculean task. It was achievable and hence, they stared working
towards the realization of the set target. The deadline did not catch such
institution napping. In fact, a few of the 89 bank which were already
capitalized up to or even beyond the required benchment of N25 billion did not
choose to rest on their oars but out to further strengthen themselves through
acquisition (bought over) of smaller banks, injection of flesh via the capital
market etc. while others were consummated i.e. Merger, those banks which
couldn't scale through the hurdles went into extinction. They were handed over
to the NDIC (Deposit Insurance Corporation).
the issue of consolidation of banks is an integral part of NEEDS i.e. National
Economic Empowerment Development and Strategy. Introduced by the last regime.
It should be noted that Merger and Acquisition apex regulatory body is (SEC)
i.e. Security and Exchange Commission. This authority sees to the
conditionality for merger and acquisition of firms/companies in Nigeria.
there is a needs to thoroughly study the requirement for mergers and
acquisition. The efficacy of this study is to exams the challenges of mergers
and acquisition to human resources management in the Nigerian banking industry.
1.2 STATEMENT OF THE PROBLEM
banking industry in Nigeria went through structural changes which has pose a
challenges to employee behaviour. The implementation of the policy have induced
a shake-out in the industry, which has infused a new set of challenges to human
resources in the banking sector. Some of which include: Delayering,
outsourcing, job-cutting, from junior to senior staff, downsizing, rightsizing,
precipitate retirement, reduced morale and loss of bargaining power,
contravening work schedule, reduction in rank of staff i.e. from the chief
executive officer to the managing director.
has created room for apathy and disparity. Also the emerging bank came across
the problem of different orientation and inactive of merging workers to dealt
with and remuneration package disparity that need to be integrated into the
direction of new banks. It should be noted that the difference that are
occurring should not be neglected, that if over look could to crisis in the
industry. This will make the essence of merger and acquisition to be a wasted
merger and acquisition, the major casualties are always the human behavioural
work pattern which has a resultant effect on individual and groups at work
place. This is because staffs of the effected banks will be jittery about job
security, which invariantly affect their productivity. This include:
The issues of job losses from top
executive to junior staff.
The need for re-orientation of the new
How effective and efficient merger and
Job design and non- unionization in the
banking sector 6. Casualization among junior staffs.
1.3 PURPOSE OF STUDY
aim of this study is to scrutinize the challenges for employee behaviour in the
emerging mergers and acquisitions of banking sector. It also has the aim of:
To examine how effective on individual
To suggest, how mergers and
acquisitions of these banks can be integrated to organization set goals.
To examine how mergers ands acquisition
affect group performance.
The effect of mergers and acquisitions
on the profitability and survival of a bank.
To examine the effect of technology on
1.4 RESEARCH QUESTION
question is regarded as the main instrument in survey research. In this regard
the main questions for this study are as follows:
Does the application of merger and
acquisition in the sector brought higher earning and stability?
Does the merger and acquisition strategies
brings about effectiveness and efficiency realized after consolidation?
Does merger an acquisition results in high
employees performance? 9. Does emerging Mega- banks have structured changes?
Does merger affect employee job position?
Does liquidity of distress bank bring about
negative influence in the banking industry?
1.5 RESEARCH HYPOTHESIS
following are the possible research hypothesis to be tested:
H0: Merger and Acquisition does not affect the
competencies of human resources (employees)
H1: Mergers and Acquisitions do affect the
competence of human resources (employees)
H0: There are no direct by off jobs in Mergers
H1: There are direct lay-off job in Mergers and
1.6 SIGNIFICANCE OF THE STUDY
implication or challenges to employee behaviour in merging and acquired banks
has become very pronounced with the emergence of mega-banks, because one reason
for merger is the need for banks to foster expansion and achieve growth and
greater profit which would otherwise be hard and be almost impossible to attain
as separate entities or would take more resources and longer time to accomplish
of each entity goes on separative ways.
have the challenges of subjecting their staffs to necessary training and skills
development for them to cope with the demand of current trend of activities in
today's banks. (Tina Weber, ECOTEL RESEARCH INSTITUTE) that involves:
High productivity and standardization.
Increased in capital base
Eradication of lack of transparency
quality of the workforce just has to improved, the study will generate relevant
data on which solution to problem of merger and acquisition as it affect human
1.7 SCOPE OF DELIMITATION
study will be carried out on the some staffs in some organizations which
includes top managers, middle managers and junior staffs, However, the
delimitation of the study will be financial constraint, time constraint, and
the objectiveness of on the part of the respondent in retrieving information.
1.8 DEFINITION OF TERMS
According to the companies and allied matters degree (1990) section 590 define
mergers as "Any amalgamation of the undertaking or any part of the
undertaking or interest of two or more companies or the undertakings or part of
the undertakings of one or more companies and one or more bodies corporate.
According to G. Omotayo Gbede (2005) defines acquisition " as the buying
over of a company by the payment of cash to its shareholders by another company
with the target company still continuing its existence but as a subsidiary of
the buying company which becomes the acquired company's holders company.
These are conditionality or factors that aid in bringing out the potentials to
tackle difficulties or problem in an environment.
Is the cutting down of the layer or levels of authority between the lower level
employees and the highest ranked employee. Downsizing: is the reasonable
reduction in the size of activity engaged in the firm and consequently cutting
in the size of employees employed by the company.
Is the act of sub-contracting less relevant aspect of the business organization
to other organization and focusing on the core business of the firm.
Is the effective and efficient acquisition, retention and utilization of the
people or human resource at work towards satisfying the workforce and the
attainment of the organizational objectives.