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Title page        –           –           –           –           –           –           –           –           –           –           i

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

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

Approval         –           –           –           –           –           –           –           –           –           –           iv

Dedication      –           –           –           –           –           –           –           –           –           –           v

Acknowledgment       –           –           –           –           –           –           –           –           –           vi

Table of Contents       –           –           –           –           –           –           –           –           –           vii

Abstract          –           –           –           –           –           –           –           –           –           –          ix


  • Background to the study –           –           –           –           –           –           –           1
  • Statement of the problem –           –           –           –           –           –           –           4
  • Research questions –           –           –           –           –           –           –           –           5
  • Objective of the study –           –           –           –           –           –           –           –           5
  • Statement of Hypothesis –           –           –           –           –           –           –           6
  • Significance of the study –           –           –           –           –           –           –           6
  • Scope of the study- –           –           –           –           –           –           –           –         7


2.1       Introduction    –           –           –           –           –           –           –           –           –           8

2.2       A Review of Bank Concentration Theories-  –           –           –           –           –           8

2.3       Empirical Works on Consolidation in Other Countries          –           –           –           15

2.4       Regulatory and Legal Framework of Capital Adequacy        –           –           –           39

2.5       Banks Distressed after the Consolidation Exercise    –           –           –           –           40

2.6       Post-Consolidation Challenges           –           –           –           –           –           –           40


3.1       Introduction    –           –           –           –           –           –           –           –           –           58

3.2       Resign Design             –           –           –           –           –           –           –           –           58

3.3       Population and Sample Size of the Study      –           –           –           –           –           58

3.4       Source of Data Collection      –           –           –           –           –           –           –           59

3.5       Method of Data Collection     –           –           –           –           –           –           –           59

3.6       Method of Data Presentation and Analysis    –           –           –           –           –           60



4.1       Introduction    –           –           –           –           –           –           –           –           –           61

4.2       Respondent Characteristics    –           –           –           –           –           –           –           61

4.3       Data Presentation and Analysis          –           –           –           –           –           –           63

4.4       Test of Hypotheses     –           –           –           –           –           –           –           –           68

4.5       Discussion of Findings           –           –           –           –           –           –           –           71


5.1       Summary         –           –           –           –           –           –           –           –           –           73

5.2       Conclusion      –           –           –           –           –           –           –           –           –           73

5.3       Recommendations      –           –           –           –           –           –           –           –           74

Bibliography   –           –           –           –           –           –           –           –           –           76

Appendix I      –           –           –           –           –           –           –           –           –           79

Appendix II    –           –           –           –           –           –           –           –           –           80


The study examines the impact of bank consolidation on operational efficiency in First Bank Nigeria Plc Kaduna. Out of 125 staff, 100 were selected for the survey. Questionnaires constitute the main instrument for data collection. The mean scores was used to analyze data the research result indicates that: Consolidation improves services delivery and customer satisfaction through efficient operation as a result of good corporate governance mechanism. In spite of this positive effect consolidation brought too much liquidity that banks are yet to become use to in term of management.  The result of consolidation in Nigeria is a replay of what happened in other countries. The experience in other countries is that banking consolidations induced by government rather than market forces merely create cosmetic changes in the balance of banks without generating sustainable improvements in banking sector performance. It was recommended that Banks should give long term loans for capital financing to corporate organization this will help reduce liquidity 




  • Background of the Study

The Nigerian banking industry has witnessed and is still witnessing revolutionary metamorphosis in recent years as a result of the restructuring programmes channeled towards resolving the existing problems of the industry by the apex bank. The most recent championed epitome is the recapitalization exercise which has shaped the structure of the Nigerian banking industry significantly. According to Adegbaju and Olokoyo [2006], the banking sector reforms and recapitalization resulted from deliberate policy response to correct perceived or impending banking sector crises and subsequent failures. A banking crisis can be triggered by weakness in banking system characterized by persistent illiquidity, insolvency, undercapitalization, high level of non-performing loans and weak corporate governance, among others they added.

Similarly, Uchendu [2009] submitted that the reforms in the banking sector proceeded against the backdrop of banking crisis due to highly undercapitalization deposit taking banks; weakness in the regulatory and supervisory framework; weak management practices; and the tolerance of deficiencies in the corporate governance behaviour of banks. The primary objective of the reforms therefore is to guarantee an efficient and sound financial system by equilibrating the competitive muscles of the existing weak banks through mergers and acquisitions.

By far, the most widely pursued corporate strategies are those designed to achieve growth in sales, assets, profits or some combination. Companies that do business in expanding industries must grow to survive. Continuing growth involves increasing sales and a chance to take advantage of the experience curve to reduce the per-unit cost of products sold, thereby increasing profits. A company can grow internally by expanding its operations both globally and domestically or it can grow externally through mergers, acquisitions and strategic alliance.

The consolidation of banks has been the major policy instrument being adopted in correcting deficiencies in the financial sector as well as accelerating the rate of growth in the sector. The economic rationale for domestic consolidation is indisputable. An early view of consolidation in banking was that it makes banking more cost efficient because larger banks can eliminate excess capacity in areas like data processing, personnel, marketing, or overlapping branch networks. Cost efficiency also could increase if more efficient banks acquired less efficient ones. Though studies on efficiency in banking raised doubts about the extent of overcapacity, they did point to considerable potential for improvement in cost efficiency through mergers. Consolidation is viewed as the reduction in the number of banks and other deposit taking institutions with a simultaneous increase in size and concentration of the consolidation entities in the sector.

The consolidation reform is consistently predicted to engender some positive changes in the Nigerian banking industry. Bank recapitalization will allow for emergence of mega banks that enjoy hidden subsidy referred to as ‘too-big-to-fail” subsidy due to the market’s perception of an illusion of government backing of a mega bank in times of crisis.Experts equally predict a change from the usual banking method to retail banking by most banks. In the past, banks have not found this segment of the market profitable and one doubts if things would change significantly, unless banks are able to deliver retail banking services in a very efficient manner, with technology playing a major role, they may not be able to keep their customers (Paula,2009).

Although the consolidation programme sounded attractive at the onset, experts have argued that the exercise is policy induced rather than market-driven and as such may encounter difficulties in realizing the anticipated goals. Consolidation policy-promoted bank recapitalisation rather than market mechanism.This process adopted by most developing or emerging economies varies from nation to nation and as such. There are for instance, high degree of suspicions among the antagonists that the consolidation policy lacks critical consideration of the realties on ground, and that the authorities may have adopted it to disempower certain group of bank owners who were recently linked to various forms of economic crimes and financial improprieties. A great concern for the consolidation exercise, despite its good intents, has been the level of controversy it generated since the CBN announced it in July 2004. In the remarks of Akpan [2009], maximizing returns and optimizing profitability became the challenge for banks immediately after the consolidation exercise where banks were required to significantly increase their level of returns and at the same time manage costs, to realize this, banks will have to offer innovative products and services to the marketplace including new ways of delivering them. As with the general economic reforms that are concurrently taking place in the country, however, most of the arguments centered more on the structure and the implementation mechanism, and not on the desirability of the exercise.

Hence,the challenge of this study is focus on examining profitability of the Nigerian bank in post-consolidation era.

  • Statement of the Problem

Banking sector before consolidation policy promogated in 2004 has exhibited several witnesses arising from undercapitalization, illiquidity as well as poor asset quality and earnings. As such the main motive of bank consolidation in Nigeria was to establish t ‘mega-banks’ at the national level, as well as to increase  cross-border and cross-sectoral transactions and the constitution of broad Nigeria financial conglomerates as well as the deregulation of banking activities. Consolidation therefore is supposed to be a  principal force that should fuel the completion of an integrated Nigerian financial market, financial globalization, technological and financial innovations, as well as the imperative of value creation in the banking sector.

Nevertheless, the consolidation policy has brought challenges arising from issues of post-merger and acquisition (M&A) activity in Nigeria banking sector. After the merger of banks that could not “consolidate” as well as acquisition and takeover of several banks to meet up the financial requirement of consolidation, bank were then confronted with post consolidation issues arising from constraint of management integration as well as loss of job and change resistant by bank employees. The argument here is that consolidation has been characterized by heightened anxieties on the part of the employees over their fate and the fate of their organizations. Therefore, it is common to find bank employees falling victims of unfounded rumors and fears of job loss, a situation that has been aggravated by conflicting and incoherent messages on the part of management and personality clashes. All these constitute a big constraint in the post consolidation period and manifest themselves in form of dampened morale and demonization, downturn in productivity, precipitous resignation, damage to corporate image, wrong signals to (prospective) investors and customers, reduction in revenue and weakened competitive advantage.

Many studies of the consolidation policy in Nigeria, found that the policy is far from having proved it economic effectiveness. Consequently, one can question the real motives behind these operations for managers and shareholders, and the effects on the collective welfare and financial stability. Finally, as big financial groups emerge, this might raise competition concerns when the concentration threshold in a relevant market is reached. By accelerating the pace of strategic responses, the recent consolidation wave within the Nigeria banking industry might lead to the homogenization of banking behavior. This raises the possible emergence of a dominant banking business model in Nigeria. One could question the drivers of success of such a model. It is against this that the researcher sees the subject matter as an issue worthy of investigation.

  • Research Questions
  1. What is the impact of bank consolidation on operational efficiency of first bank?
  2. How is first bank performing in the post-consolidation period?
  • What are the problems militating against first bank in post-consolidation period?
    • Objectives of the Study
  1. To identify the impact of bank consolidation on operational efficiency of the First bank.
  1. To asses the profitability of first bank in post-consolidation period.
  • To find out the problems militating against first bank in post-consolidation period.


  • Statement of hypothesis

Ho1:    Bank consolidation does not have a significant impact on operational efficiency of First bank

H11:     Bank consolidation has a significant impact on operational efficiency of First bank

Ho2:    Bank consolidation does not have significant effect on the  Operational Efficiency of First bank in post consolidation period.

H12:     Bank consolidation has a significant effect on the Operational Efficiency of First bank in post consolidation period.

Ho3:    First bank is not confronted with problems arising from post consolidation challenges.

H13:     First bank is not confronted with problems arising from post consolidation challenges.


  • Significance of the Study

The study will be beneficial to commercial banks in Nigeria, especially as they utilize the findings of this research to solve post-consolidation problems militating against their banks.

The study will enhance existing knowledge of bank consolidation problems militating against their banks.

The study will enhance existing knowledge of bank consolidation and will be a springboard to undertake similar research.


  • Scope of the Study

The study will cover an investigation into the impact of first as well as assessment of its performance in the post-consolidation period.

The study will equally cover problems militating against first bank in first-consolidation period. The collection of primary data will be restricted to first bank Kaduna.The choice of First bank is due to it age which has enable it to witness numerous government reforms as well as it large network of branches.It was equally choosen as the study area because it meet up recapitalization criteria and survived the consolidation reform.

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