THE IMPLICATION OF THE RECAPITALIZATION POLICY ON THE PERFORMANCE OF BANKS IN NIGERIA ( A CASE STUDY OF UNITED BANK FOR AFRICA)


THE IMPLICATION OF THE RECAPITALIZATION POLICY ON THE PERFORMANCE OF BANKS IN NIGERIA ( A CASE STUDY OF UNITED BANK FOR AFRICA)

 ABSTRACT

This study examines the current banking sector reforms and repositioning through recapitalization for competitive advantage with a particular reference to United Bank for Africa. The study further discovered that the fragile banking system in Nigeria create a number of problems in the country. This includes lost of depositor’s money, loss of jobs, loss of confidence in the banking system, major financial crises resulting in failure and distress banking syndrome, and inability of the banks to contribute in any significant ways to national development. Finally, the study discovers that in order for United Bank for Africa to strategically reposition itself fro competitive advantage in the post recapitalization era. More emphasis are needed in areas of marketing, information technology, customer services quality of personnel and technology.

TABLE OF CONTENTS

Title page - - - - - - - - - i

Declaration - - - - - - - - ii

Approval page - - - - - - - - iii

Dedication - - - - - - - - - iv

Acknowledgment - - - - - - - v

Abstract - - - - - - - - - vii

Table of Contents - - - - - - - viii

CHAPTER ONE

INTRODUCTION

1.0 Background of the Study - - - - - 1

1.1 Statement of the Problem - - - - - 4

1.2 Objective of the Study - - - - - - 6

1.3 Research Questions - - - - - - 6

1.4 Significance of the Study - - - - - 7

1.5 Scope of the Study - - - - - - 9

1.6 Limitation of the Study - - - - - 9

1.7 Definition of Terms - - - - - - 10

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction - - - - - - - 12

2.2 The Concept of Recapitalization - - - - 13

2.3 Recapitalization in Developed Countries - - 16

2.5 Trend of Recapitalization in Nigerian Banks - - 26

2.6 Recapitalization and Banks Performance - - 9

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction - - - - - - - 34

3.1 Area of the Study - - - - - - 35

3.2 Research Design - - - - - - 35

3.3 Population of the Study - - - - - 35

3.4 Sample Size and Sampling Finding - - - 36

3.5 Data Collection Instrument - - - - 36

3.6 Administration of Instrument - - - - 36

3.7 Method used in Analysis of this Study - - - 37

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Introduction - - - - - - - 38

4.2 Customers Questionnaire - - - - - 50

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.0 Introduction - - - - - - - 57

5.1 Summary of Findings - - - - - - 57

5.2 Conclusion - - - - - - - - 60

5.3 Recommendations - - - - - - 62

Reference - - - - - - - - 65

CHAPTER ONE

INTRODUCTION

1.0 Background of the Study

The Nigerian banking industry has witnessed tremendous changes and expansion since the mid 1980s. Unfortunately the growth and expansion in the sector are not the manifestation of a sound or vibrant banking system known anywhere in the world. Most banks in Nigeria are characterized by inadequate capital base, poor services, hug rate of bankruptcy, lack of management expertise, bad debt syndrome and greater exposure to fraud. In addition, many have poor database and lack of reliable information on which sound policy decision can be take by Board of Directors. This is a fragile banking system which is waiting to explode from the contagion effect of the liquidation of over eleven banks which are technically considered distressed. Currently there are 89 banks in operation in Nigeria, with 79 being considered marginal or fringe players and with over 1,036 – fraud case in banks in 2003 while N9.3 billion was lost through fraudulent activities.

A poor banking system of this nature creates unquantifiable problems and crisis in the economy which could result in thousands of people losing their jobs, lost of depositors’ money, lost of confidence in the banking system and above all the banks can have little contribution to the economic development of the country. Essentially, the objectives of the new, banking sector reform though recapitalization of N25 billion for each bank intends among other things to take proactive steps to prevent an imminent systematic crisis and collapse of the banking industry, create a sound banking system that depositors can trust, create banks that investors can rely upon to finance investment in the economy to drive down the cost structure of banks and make them more competitive and development oriented and to ensure Nigeria meets minimum requirements for regional financial system integration, effectively, positioned to be a key. African regional and global player.

Taking this steps is imperative for the survival of the fragile banking system in Nigeria and to be at per with the global trend. Generally speaking, the current average capitalization of banks in Nigeria is less than $10 million or N1.3 billion and with the largest bank in Nigeria having $298 million compared with the smallest Malaysian bank with $526 million. This is an important indices for an understanding of the unique, nature of the Nigeria banking system among developing economies. 

In the study an attempt has been made by examining the fragile banking system of Nigeria, the need for recapitalization, the various strategies by Commercial Banks to meet the recapitalization requirements and how recapitalization can enhance repositioning of Commercial Banks in competitive marketing environment of Nigeria. Although the full policy implementation of recapitalization takes effect from December 2005, this study provides an insight into the anticipated challenges of post-recapitalization era. These challenges as evident in the current mergers and acquisitions by smaller banks provide input for academic research and analysis. However, it is also the intention of this study to outline the various repositioning strategies of United Bank for Africa towards meeting the challenges of the Banking Sector reforms in maintaining a leading position among new generation banks in meeting the CBN recapitalization requirement deadline.

It is hope that the finding of this research study would provide a pioneering blue-print for commercial banks in Nigeria to adequately cope with post-recapitalization challenges of the marketing scenario.    

1.1 Statement of the Problem

The rising incidence of bankruptcy and distress syndrome in the Nigerian baking system caused by poor capital base, lack of management expertise, bad debt syndrome corrupt practices and fraud among other have created serious concern to depositors, investors and the rational economy. The need to address this issue has brought the need for redefining the capital base of commercial banks in Nigeria to make the banking sector strong. Dependable and viable with minimal distress and meaningful contribution to the growth of the Nigerian economy. The recapitalization of N25 billion makes it imperative for Commercial Banks to seek for investors and to merge into meet the December 31st 2005 deadline.

The banks that meet up the recapitalization targets may be fewer in number, stronger in capital base, well positioned to carry out full the main challenges before the competing banks is to evolve effective marketing strategies to attract customers to patronize their services and to maintain a leading position in the industry.

United Bank for Africa as a successful emerging bank under the new recapitalization policy has a well designed, modern financial marketing network, better positioned for the post-recapitalization competitive marketing of financial services in Nigeria.

This study makes a critical analysis and examination of the marketing activities of United Bank for Africa Plc, Abuja designed to achieve competitive advantage. It is hope that the finding of this study would provide an important blue-print for effective modern marketing of banking services in Nigeria.

1.2 Objective of the Study

The main important objective of this study is to examine positioning strategies for competitive advantage through recapitalization in the banking industry with a special reference to United Bank for Africa, Kaduna. The study is specifically design to achieve the following objectives: 

a) To present the various shortcomings of the current banking system, of Nigeria

b) To provide the rational behind the CBN recapitalization policy for commercial banking in Nigeria

c) To identify the challenges facing commercial banks towards the dateline for recapitalization 

d) To find out the vicarious plans of action or strategies for competitive advantage at post-recapitalization epoch

e) To provide recommendation and solutions identified by the study 

1.3 Research Questions

This research study intends to address the following research questions:

a) Why should the minimum capital base for commercial banks in Nigeria be raised to N25 billion?

b) Can recapitalization of the banks result in the desired positive change for the Nigerian economy?

c) What are the implications of the reform on the existing job situation in the country include the job security in the banking industry?

d) What will happen to customer accounts (loans and deposits) for banks that cannot meet the requirement?

e) If a bank acquired or goes into mergers in the existing consolidation process, what does this imply for bank’s existing customer that do not fall within its redefined target market?

f) Beyond the N25 billion are there further increases in the capital requirement for banks in future?

1.4 Significance of the Study

The significance of this study has essentially on the important contributions made by the study to individuals commercial banks, investors, financial analyst and other interested in the genuine development of the Nigerian banking system through recapitalization.

First and foremost, the management of United Bank for Africa would find this study very compressive in presenting the clear picture of the crisis and conflicts in the Nigerian banking system, including strategies to meet the CBN recapitalization through various mergers and consolidation strategies. In addition, the views of seasoned bankers researchers and financial analysts on the future of the Nigerian banking system under the recapitalization policy would by providing to make it easier for the bank to discern area of threats as well as opportunities in the years ahead.

Secondly, recapitalization being a new concept in the baking industry and even in academia, thus research project would provide an important reference material for people from all walks of life, including students, bankers, investors and the general public. Finally, it is also hope that the various suggestions and recommendation presented in this study would serve as effective strategies in meeting the post-recapitalization marketing activities of commercial banks in Nigeria.  

1.5 Scope of the Study

This research study focuses on the marketing activities of United Bank for Africa, Kaduna. Though data collection might be centrally to be done through the head office in Kaduna but the analysis and interpretation of findings may cover all the state branches in Kaduna. 

1.6 Limitation of the Study

a) Uncooperative Attitude of Respondents: The bank used as case study initially did not cooperate with the researcher due to the fact that in the current competitive environment, an organization regards any persons who comes for an enquiry as a spy on the activities who used by their competitors to undo them in the market place. This explains the uncooperative attitude of the bank that was visited initially. 

b) Time Factor:  this project work was written when academic activities was at the highest peak particularly for us the final year students. Therefore, little time was set aside for this important task.

c) Financial Constraints: This project work was much tasking as it was not easy to obtain materials, the cost involved in typing, photocopying and binding as a student of this level. 

d) Lecturers are also expected to lecture and at the same time supervise a good number of projects, lecturing, which is the main task of every lecturer tend to limit the frequency of project, supervision. Despite these constraints, the main objectives set for this study has been fully achieved.

1.7 Definition of Terms

The following terms and abbreviations used in this study are explained as follows:

⦁ Syndrome: A group concurrent symptoms of a disease. 

⦁ Management: The art of getting things done through and with people in a formally organized way. It is the aid of creating an environment in which people cooperate towards the attainment of group objectives. 

⦁ Service: A service is an intangible offering or benefit that cannot be seen, felt, heard, tasted or smelled before being purchased. 

⦁ Fraud: An act of deliberate deception with the intention of securing something monetary gained by taking an unfair advantage over another person

⦁ Bank Failure: This is where a bank becomes insolvent or whose total property (assets) and intangible right (securities) are insufficient to pay all its debts obligation

⦁ CBN: Central Bank of Nigeria

⦁ NDIC: Nigeria Deposit Insurance Corporation

⦁ Capital: Paid-up capital and reserves unpaired by losses

⦁ Reserves: Surplus resulting from revaluation in the course of consolidation

⦁ Paid-up-capital: Ordinary shares plus non-redeemable preference shares  

.

THE IMPLICATION OF THE RECAPITALIZATION POLICY ON THE PERFORMANCE OF BANKS IN NIGERIA ( A CASE STUDY OF UNITED BANK FOR AFRICA)



TYPE IN YOUR TOPIC AND CLICK SEARCH.






RESEARCHWAP.NET

Researchwap.net is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. Researchwap.net guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.

TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • "Researchwap.net is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "researchwap.net" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.