ABSTRACT
The
research centered on the merger and acquisition as a viable option for
effective performance of banking in Nigeria using United Bank for Africa Pic as
a case study. In carrying out the research, two (2) hypothesis were stipulated
which basically questioned the significant of merger and acquisition on the
performance of banks in Nigeria and the significant impact of merger and
acquisition on the job performance of an employee in banking industry. To test
these hypothesis, chi-square statistical tool was employed. It was found out
that merger and acquisition is a viable option for effective performance of
banking in Nigeria and that merger and acquisition has great impact on the job
performance of an employee in banking industry. It is recommended that, the
central bank of Nigeria should set up an Asset Management Company (AMC),
Training and Manpower Development (TMD), and employ the use of information and
communication technology to ensure effective consolidation process in banking
industry.
TABLE OF
CONTENTS
CHAPTER ONE
1.1 Background
Information
1.2 Statement of
the problem
1.3 Objective of
the study
1.4 Restatement
of Research question
1.5 Restatement
of Research hypothesis
1.6 Significance
of the study
1.7 Limitation
of the study
1.8 Definition
of terms
References
CHAPTER TWO
2.1 Introduction
2.2 Types of
merger
2.3 Forms of
mergers
2.4 Reasons for
acquisition
2.5 The position
of the banks immediately after merger /acquisition
2.6 Were these
performance sustained
References
CHAPTER THREE
3.1 Introduction
3.2 Research
design
3.3 Population
3.4 Sample size
3.5 Sampling
techniques
3.6 Method of
data collection
3.7 Method of
data analysis
3.8 Restatement
of research question
3.9 Restatement
of research hypothesis
3.10 Limitation of
the study
References
CHAPTER FOUR
4.1. Introduction
4.2. Analysis of
respondent 'Bio Data
4.3. Analysis of
operational variables
4.4. Descriptive
statistics of operational variables
4.5. Reliability
test
4.6. Test of
hypotheses
CHAPTER FIVE
5.1 Introduction
5.2 Summary of
findings
5.3 Conclusion
5.4 Recommendation
5.5 Suggestion
for further study
Bibliography
Questionnaire
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Mergers and acquisition are consolidation, strategy used
to correct the deficiencies in the financial sector. Merger is said to occur
where two or more companies combine into one company. One or more company may
merge with an existing company or they may merge to form a new company. In
merger there is complete amalgamation of the assets and liabilities as well as shareholders'
interest and business of the merging companies while an acquisition on the
other hand is an act of acquiring effective control over assets or management
of a company by another company without combination of business or companies.
The Nigerian banking sector regulator; Central Bank of
Nigeria (CBN) employed merger/acquisition as a consolidated instrument to
correct the deficiencies in the financial sector in 2005. This was done under
the leadership of the then CBN Governor; Professor Charles Soludo. The economic
rationale behind this domestic consolidation policy as at this time was highly
indisputable. The justifications being that, Nigeria as at this time had 89
banks with 3,382 branches predominantly situated in the urban centers as at June
2004 (Soludo, 2006). Besides, these branches were characterized by structural
and operational weaknesses such as; low capital base, dominance of a very few
banks, insolvency and illiquidity, overdependence on public sector deposits and
foreign exchange trading, poor asset quality and weak corporate governance, low
depositors' confidence, banks that could not effectively support the real
sector of the economy and banking sector with credit to the domestic economy at
24% economy and banking sector with
credit to the domestic economy at 24%) of GDP compared to African average of
87% and 272% for developed countries (Soludo, 2006). Given these bedeviled
circumstances, it became sensible to ensure quick and spontaneous intervention
strategies to save the system from total collapse and to improve the
performance of the industry. Therefore, the driving forces behind the
consolidation (merger and acquisition) agenda included; effective performance
of the industry, better risk control, advancement of marketing and product
initiatives, improvement in overall credit risk and technology exploitation,
effective banking supervision, evolution of a strong and safe banking system,
improved transparency and accountability, cost reduction and effective global
competition, depositors' trust among other factors. These drivers were
anticipated to improve the operational efficiencies and operations of the
players in the banking sector that will survive the consolidation era. However,
Forlong (1998) claimed that, merger and acquisition in the banking industry has
had more impact on the structure rather than the performance which has been
harder to discern. The decade (1995 and 2005) was particularly traumatic for
the Nigeria banking industry, with the magnitude of distress reaching an
unprecedented level, thereby making it an issue of concern not only to the
regulatory bodies but also to the public. It was this that actually
necessitated the need for an overhauling strategy of the entire financial
system which made the CBN introduced a very major reform agenda that changed
the banking landscape of the country in 2004. The reform was a 13 agenda reform
which main thrust was the prescription of a minimum capital base of 25 billion
Naira. This reform further led to merger and acquisition in the industry and
scaled down the Nigeria banks from 89 to 25 and much later 24. This study aims
to evaluate merger and acquisition as a viable option for effective performance
of banking industry in Nigeria. It is interested to measure the extent to which
this twin strategy has fared among the emerged banks from the consolidation and
the attendant effect on the nation's aggregate economy.
1.2 STATEMENT OF
THE PROBLEM
Mergers and acquisitions have become more often
associated with lowered morale, job dissatisfaction, unproductive behavior,
increased turnover and absenteeism, rather than with increased financial
performance as expected. An estimate by Davy et al. (1988), blames
"employee problems" as being responsible for one-third to one-half of
all merger failures. Therefore, the underlying causes of employee resistance
need to be studied carefully because their understanding has the potential of
improving merger planning and outcomes. As negative employee reactions are
believed to account partially at least for unsuccessful M& As, the
interesting question to answer is why mergers and acquisitions trigger negative
reactions in employees. We identify two sources: first mergers are a source of
profound change for the organization, and change, in any shape or form is
likely to be a source of stress for the employees as it places special demands
on them.
As it is well recognized, excessive stress increases job
dissatisfaction and this, in turn, is associated with a number of dysfunctional
outcomes including increased turnover, and absenteeism and reduced job
performance. Secondly, the main source of stress in the merger/acquisition
process is the uncertainty surrounding organizational and personnel changes
that follow them. It is often these uncertainties, rather than the actual
changes themselves that are more stressful to employees.
1.3 OBJECTIVES OF
THE STUDY
The general aim of this research work is to know if
merger and acquisition is a viable option for effective performance of banking
industry in Nigeria.
The main objective is:
Ø To examine thoroughly how merger and acquisition impacts
on the performance of banks in Nigeria.
Ø To determine the relationship between the banking and
merger/acquisition in the Nigerian banking industry
Ø To determine the efficiency and effectiveness of
merger/acquisition on banks in Nigerian
Ø To test the effectiveness of merger and acquisition on
the employee performance in Nigeria banking industry.
Ø To determine the impact of merger and acquisition on
employment generation
Ø To determine the relationship between bank lending to the
real (private) sector and regulation on the industry.
Ø To underscore the efficiency of the consolidation
exercise presently embarked upon by the Central Bank towards effective banks
performance.
1.4 STATEMENT OF
RESEARCH QUESTION
Below are some questions that would be answered during
the course of this research works:
Ø What effect does merger and acquisition has on job
performance of an employee?
Ø Is merger and acquisition a viable option for effective
performance in banking industry?
Ø Does consolidation strategy improve productive behavior
in Nigeria banking industry?
Ø Does merger and acquisition have effect on the turn-over
in banking industry?
Ø Does merger and acquisition enhance employment
opportunity in Nigeria?
1.5 STATEMENT OF
RESEARCH HYPOTHESIS
To ensure a mere analytical result oriented research,
hypotheses are formulated and tested on the research objectives.
The decision criteria are to accept the null hypothesis
(Ho) and reject the alternative hypothesis. (Hi) or otherwise based on the
result of the test performed. The research hypotheses are stated below:
HYPOTHESIS 1
Ho: Merger and acquisition has no significant effect on
the performance of banking industry in Nigeria.
H1: Merger and
acquisition has significant effect on the performance of banking industry in
Nigeria.
HYPOTHESIS 2
Ho: Merger and
acquisition has no significant impact on the job performance of an employee in
banking industry.
H1: Merger and
acquisition has significant impact on the job performance of an employee in
banking industry.
1.6 SIGNIFICANCE
OF THE STUDY
The research work is significant in that it will be very
useful to economic watchers and the interested public; it will provide some
insight into the process of merging and banking administration in the era of
reforms.
It will also help to show how merger and acquisition is
responsive to the determination of stable economic growth.
It will serve as a body reserved knowledge to be referred
to by scholars and researchers.
Provide adequate information on the existing body of
knowledge on people's problem in a merger process.
It will throw more light on how effective and stable
banking have manipulated the lives of numerous countries into paradise on earth
through banking reforms.
1.7 LIMITATION OF
THE STUDY
This research shall focus on United Bank for Africa (UBA)
Pie as reference for analyzing the prospects of merger and acquisition as a
responsive indicator to the determinant of stability in banking sector.
The constraints to this study are: time, inadequate
information, lack of enough literature on this subject and information which
are considered confidential were not revealed by some of the staff
1.8 DEFINITION OF TERMS
Consolidation: A
process of firming up the market price following a substantive change in price
it is all government securities which it redeems at its own discretion, paying
the fixed amount of interest each year until the repayment of the capital.
Consummated: Is an act of bringing something to complete or perfect.
It is a supreme process to fulfill something viable.
Globalization: A rationalizing or result of reducing cost of industrial
production to meet competition especially in the world market.
Resultant: Combination or joining of two or more industries together
to achieve company objectives.
Shareholder:
One who owns shares or stock in a corporation or mutual fund. For corporation,
along with the ownership comes a right to declared dividends and right to vote
on certain company matters, including the board of directors.
Stakeholder: Persons, groups, or organization that has direct or
indirect stake in an organization because it can affect or be affected by the
organization's actions, objectives, and policies.
Synergy: The working together of two or more people or group
which have a greater total effect than the sum of their individual effect.
Trailblazer:
The first person to mark out a path for others to follow.
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