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This thesis examines the current transformation on the banking sector in Nigeria. It attempts to examine how the banks, particularly Hallmark bank, plc can reposition itself through recapitalization for competitive advantage. Although the bulk of the literature on the subject matter are on the banking sectors reforms, including the various techniques and strategies in meeting with the 18 months recapitalization deadline the finding makes, conjunctive on the post recapitalization challenges and realities.

The study covers selected commercial banks within Kaduna Metropolis and the management of Hallmark bank Plc Abuja. Within these groups the designed questionnaire were administered for the purpose of data collection.

A total of 24 questions were asked on the questionnaire for the bank managers and another set of 14 questions for the bank customers within the areas covered by this survey.

The study conclusively found that recapitalization is a great milestone in the Nigeria banking sector that is designed to strengthen and revitalize the fragile banking sector in Nigeria. In addition, the expected gains of the reform are enormous for those banks that survive the current reform exercise. On the part of the consuming public, a significant proportion of them have little of no understanding of the need for the reform.

An important recommendation is for the CBN and other stakeholders to create public awareness on the changes opportunities and future of he banks in the past recapitalization era.



Title –        –       –       –       –       –       –       –       –       –       –       i

Declaration –      –       –       –       –       –       –       –       –       –       ii

Certification –      –       –       –       –       –       –       –       –       –       iii

Dedication –       –       –       –       –       –       –       –       –       –       iv

Acknowledgment –      –       –       –       –       –       –       –       –       v

Abstract –  –       –       –       –       –       –       –       –       –       –       vii

Table of content –       –       –       –       –       –       –       –       –       ix


CHAPTER ONE – Introduction

1.0    Background of the study

1.1    Historical Background of Hall Mark bank PLC

1.2    Statement of the Problem

1.3    Objectives of the study

1.4    Scope of the study

1.5    Significance of the Study

1.6    Research Question

1.7    Limitation of the study

1.8    Definition of Terms



CHAPTER TWO- Literature Review

2.0    Introduction

2.1    The Rationale behind Recapitalization of Commercials

Banks in Nigeria

2.2    Genesis of Banks failure

2.3    Effects of Distress Bank on the Economy

2.4    The objectives of The banking Reforms

2.5    Mergers and acquisitions as strategies to meet up with Recapitalization deadline

2.6    Rationale for Mergers

2.7    Valuation of Merger Candidates

2.8    Merger Tactics



CHAPTER THREE – Research Methodology

3.0    Introduction

3.1    Research methodology Employed

3.2    Justification of Approach Used

3.3    Research Instrument Used

3.4    Research Population and Sampling size

3.5    Sampling Procedures Employed

3.6    Justification For Sampling Procedures Employed

3.7    Statistical Techniques Used to analyzing Data


CHAPTER FOUR – Presentation and Analysis of Data

4.0    Introduction

4.1    Data Presentations and Analysis


CHAPTER FIVE – Summary, Conclusion & Recommendations

5.0    Introduction

5.1    Summary of Findings

5.2    Conclusion

5.3    Recommendations


Appendix I

Appendix II









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, high 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 taken by Board of Directors. This is a fragile banking system which is waiting to explode from the contagion effects 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 cases 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 through recapitalization of N25 billion for each bank intends among other things to take proactive steps to prevent an imminent systemic 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 investments 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 step 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 Malasian bank with $526 million. This is an important indices for an understanding of the unique nature of the Nigerian banking system among developing economics.


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. In addition, it is also the intention of this study to outline the various repositioning strategies of Hallmark Bank Nigeria Plc. 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.




The bank was incorporated on 29th October 1990 as Hallmark Bank Nigeria Limited. It was granted license to carry on commenced business on 22nd January 1991. It commenced business on 2nd April 1991. It changed its name to Hallmark Bank Limited on 24th April 1991. It became Hallmark Ban Plc on 24th September 1996. The principal activity of the bank through out the years continued to be provision of commercial banking services such services include granting of loans and advances, project financing, trade finance activity and money market operations.


With 32 branches to date, 9 in Lagos, 3 in Oweri, two each in Aba, Port Harcourt and Abuja, One in Onitsha, Ummahia, Bonny, Awka, Enugu, Warri, Jos, Abakaliki, Uyo, Kano, Maiduguri, Benin, Otigbo and Kaduna, Hallmark Bank is expanding in line with growth strategy to position it closer to its customers and to harness the penitential of the Nigerian Market. All the bank’s branches are interconnected via Hallmark global Banking System (HGBS) to enable you access your account from any of the bank branches.


In this era of globalization, when technology offers banks enormous leverage in capturing niche markets. Hallmark Bank cannot but play in the top most segment of the Information Technology race. The deployment of the latest Information technology from the IBM stable The IBM risc model P 670 serve as a further demonstration of their desire to deliver to customers, financial services at the speed compatible with the best any where in the world.


Hallmark Bank is the second financial Institution in Nigeria to have acquired this Infrastructure. To Safeguard the equipment and direct Internet background has been installed as a first step towards launching full internet banking service later this year.


The Introduction Technology model of bank is capable of linking over 150 branches given its high reliability rating already, all their 32 branches in operation have been inter-connected.


With the issuance at the shares authorized by shareholders at the preceding Annual General Meeting, the banks paid-up capital rose to N1.0 billion in accordance with regulatory requirement. The banks authorize share capital also increased form N2.0 billion to N3.0 billion consisting of 6 billion ordinary shares of 50 kobo each in accordance with members’ approval at the same meeting. Following the same subsequent successful hybrid offer subscription and right issue of N1.3 billion and N700 million shares respectively undertaken by the bank. It’s paid up capital rose significantly to N1.87 billion. However, this figure could not be reflected in the present accounts a the proceeds were received after 31st March 2003/2004 the share holders fund of the bank rose to N8.9 b. with assets base of N48. billion at the end of 2004/2005 financial years  the share holders funds risen to over n10 billion. The bank at its 10th Anniversary celebration set a vision 2011 targeting share holders fund of 50 billion and asset base of N500 billion.

In response to the Central bank recapitalization call the board of the bank has authorize increase of the authorize share capital of the bank to N25 billion. With this level of capitalization and strategic plans put in place by the bank it now stands in goods state to pursue its future expansion and consolidation program.


The proceeds of the bank shall be deployed to finance expansion of branch network, improvement in information technology, provide additional working capital and prosecute investment in Universal banking, with this level of capitalization, the bank stands in good stead to purse our expansion programmes in the next few years.


The table below provides bridge. Information on the banks performance over the last five years.


Profit & Loss A/c 2004

N 000


N 000


N 000


N 000


N 000

Gross Earning   7405870 7182372 4669317 2876688
Profit before taxation   1457668 1564176 1253632 811758
Dividends   105000 350,000 210,000
Earning per share of No 50l each   50.3k 80.9k 73.7k 49.4k
Dividends per share of No each   Nil 7.5k 25k 15.0k





The rising incidence of bankruptcy and distress syndrome in the Nigerian banking system caused by poor capital base, lack of management expertise, bad debt syndrome corrupt practices and fraud among others have created serious concern to depositors investors and the national economy. The need to address these issues have 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 into mergers to 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.


Hallmark Ban Nigerian Plc 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 Hallmark Bank Nigeria Plc, Abuja designed to achieve competitive advantage. It hoped that the findings of this study would provide an important blue print for effective modern marketing of banking services in Nigeria.



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 Hallmark Bank Nigeria Plc. Abuja. The study is specifically designed to achieve the following objectives:

  1. To present the various shortcomings of the current banking system, of Nigeria.
  2. To provide the rationale behind the CBN recapitalization policy for. Commercial banking in Nigeria.
  3. To identify the challenges facing commercial banks towards the dateline for recapitalization.
  4. To find out the vicarious plans of action or strategies for competitive advantage at post recapitalization epoch.
  5. To provide recommendations and solutions identified by the study.



This research study focuses on the marketing activities of Hallmark Bank, Nigeria Plc. Abuja Headquarters and o its various branches nation wide. Though data collection might be centrally to done, through the head office in Abuja but the analysis and interpretation of findings may cover all the state branches nation wide.



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


First and foremost, the management of Hallmark Bank 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 recapitalized policy would be provide to make it easier for the bank to discern areas of threats as well as opportunities in the years ahead.


Secondly, recapitalization being a new concept in the banking 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 hoped 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.

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