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  • Name: CENTRAL BANK OF NIGERIA REFORM POLICY AND THE BANKING SECTOR (A STUDY OF UNITY BANK PLC, OZORO)
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ABSTRACT

We have to embark on this work as a result of the illness of the Nigeria Banking Sector, the cost of confidence in the system which has led to the lost of glory in the International Scenic, this as the factors, a crusade led by Professor Charles Soludo. According to report, the Nigeria Banking Sector was wielding in term of assets, management and their low capital base most banks in western world and South Africa stood a bigger chance than all the banks in Nigeria put together. These calls for the problem that confronted the Nigeria banking sector which include: (i) lack of strong capital base (ii) inability to meet customer drawing needs (iii) inability to finance large service and project with an attempt made, above the problem were clarified hence through he course of the reforms of the Central Bank of Nigeria (CBN), the solution of their capital asset from N25 billion which has introduced some banks in Nigeria into international atmosphere of glory like Union Bank which was awarded by Euro money as the best bank in Nigeria and being among the first one thousand in the world, but in spite of all these attributed glory of the reform, a lot of impact has been integrated into banking sector which also raised from the analysis of data and findings. It was observed that the problem has been so justified the market place or customers and the of mergers/acquisition which was the new term transported into the Nigeria banking sector which was the led took or the acquisition of the dream of Central Bank Sector which was the key tool for the acquisition of the banks. In the conclusion and recommendations, the impact of the reform policy of the Central Bank of Nigeria (CBN) was highly criticized and suggested was raised. It was also advised that banks should realized the intention of the Central Bank of Nigeria reform in promoting a standardized and also the globalization of the Nigeria banking sector in order to attain the 80 desired economy and regaing of the lost confidences and their competitive improvement amongst their international counterparts.

 

TABLE OF CONTENTS

Title Page…         …      …      …      …      …      …      …      …      …      i

Certification…     …      …      …      …      …      …      …      …      ii

Dedication…        …      …      …      …      …      …      …      …      iii

Acknowledgment…       …      …      …      …      …      …      …      iv

Table of Content…        …      …      …      …      …      …      …      v

Abstract…  …      …      …      …      …      …      …      …      …      viii

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study…     …      …      …      …      …      1

1.2     Statement of the Problem…    …      …      …      …      …      3

1.3     Objective of the Study…         …      …      …      …      …      …      4

1.4     Significance of the Study…     …      …      …      …      …      5

1.5     Research Questions…    …      …      …      …      …      …      6

1.6     Scope of the study …    …      …      …      …      …      …      6

1.7     Limitation of the Study…       …      …      …      …      …      7

1.8     Operational Definition of Terms…   …      …      …      …      8

CHAPTER TWO

LITERATURE REVIEW

2.1     Theoretical Framework…       …      …      …      …      …      10

2.2     Brief History of Reform in the Nigeria Banking Sector

Before 2004…      …      …      …      …      …      …      …      11

2.3     Bank Merger/Acquisition as an Instrument for the

Implementation of the Reform Policy…     …      …      …      13

2.4     Unity Bank Group as a Result of Recapitalization of Banks

in Nigeria…          …      …      …      …      …      …      …      …      15

2.5     Brand Implement…       …      …      …      …      …      …      16

2.6     Benchmarks of the Central Bank of Nigeria Reform…  …      17

2.6.1  Action taken by CBN… …      …      …      …      …      …      17

2.7     Guidelines and Incentive in Bank Consolidation by the

CBN Prescription…      …      …      …      …      …      …      18

2.7.1  Consolidation option …          …      …      …      …      …      …      18

2.7.2  Guideline for consolidation … …      …      …      …      …      18

2.7.3  Legal issues…      …      …      …      …      …      …      …      19

2.7.4  Incentive … …      …      …      …      …      … … …      …      19

2.8     Problem of Bank Before the Reform Policy in the Nigeria

Nigeria Banking Sector…        …      …      …      …      …      20

2.8.1  Wear corporate governance …         …      …      …      …      …      20

2.8.2  Late of Non Publication of Annual Report…       …      …      …      21

2.8.3  Insolvency…        …      …      …      …      …      …      …      21

2.8.4  Black capital base …     …      …      …      …      …      …`     21

2.9     Reasons for the Recapitalization…   …      …      …      …      22

2.10   Impact of the Central Bank of Nigeria Reform in the

Nigeria Banking Sector…        …      …      …      …      …      23

2.10.1         Effective regulation and supervision on banking …      …      …      24

2.10.2         The economy growth … …      …      …      …      …      …      24

CHAPTER THREE

RESEARCH METHODOLOGY

3.1     Introduction…     …      …      …      …      …      …      …      26

3.2     Area of the Study…       …      …      …      …      …      …      27

3.3     Population…        …      …      …      …      …      …      …      27

3.4     Sample and Sampling…          …      …      …      …      …      …      28

3.5     Introduction…     …      …      …      …      …      …      …      28

3.6     Description of the Instrument…       …      …      …      …      …      28

3.7     Reliability of the Instrument…         …      …      …      …      …      29

3.8     Questionnaire Administration and Retrieval…    …      …      29

3.9     Techniques of Data Analysis…        …      …      …      …      …      29

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1     Data Presentation…      …      …      …      …      …      …      30

4.2     Data Analysis…   …      …      …      …      …      …      …      31

4.3     Discussion of Findings…        …      …      …      …      …      …      40

CHAPTER FIVE

SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATION

5.1     Summary…          …      …      …      …      …      …      …      …      41

5.2     Findings…  …      …      …      …      …      …      …      …      42

5.3     Conclusion…       …      …      …      …      …      …      …      44

5.4     Suggestion for Further Studies…      …      …      …      …      46

5.5     Recommendation…       …      …      …      …      …      …      47

References…        …      …      …      …      …      …      …      49

Appendix I…       …      …      …      …      …      …      …      50

Appendix II…      …      …      …      …      …      …      …      51

 

 

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF STUDY

In recent time the Nigeria Bank Sector was experiencing some problem and in its performance and operation which is more as result of failing nature of banks in the Nigeria economy.

The problem in great the line competitive of the stream turning of the reputation of the Nigeria banking sector among its international counterparts in its performance, achievement and integrity.

The bid for the upgrade if this sector necessitates most of the Nigeria banks have problem with financial management in the commercialization of its resourceful strength to economies development as regarded then micro project financing and giving out of loan recidessly without repayment insurance of the banking industry and as well as stronger effective and efficient financial system.

In order to save the heads of failing banks from the dirty player of dispatching from the banking sector has led management of the bank to dealing of take profit and untimely adjustment of their balance sheet, which tend to hid their true financial position in the banking sector, this include the centre management and the monitoring committee of the Central Bank of Nigeria in the control of the bank with this false instruct.

It was in the view of finding last solution to the economy saga, that Central Bank of Nigeria in 2004.

Unveil its reform amender as per Nigeria a banking sector in controlling with the old goals through the federal ministry of finance which was tagged this reformation as N25 billion on recapitalization of bank with regard to the premium capital base of N2 billion it was through this that the bank from the 89 operational banks to 25 banks with stronger management and wealth capital base. This untaken the sentence of management of the as they fails to meet up with the dead line for adherence to this principle set aside by the Central Bank of Nigeria on 31st December 2005.

Although it has not been lazy to carry out this national reform, the Central Bank of Nigeria through the leadership of Professor Charles Soludo first compelled the banking sector of the economy to adhere strictly to this reforms policy at it set aside and instrument for the failed banks out of the 89 banks in the sector “the Central Bank of Nigeria reader 11 banks to uncontrolled and 62 to be sound” with 300 branches as compared to only 8 bank in South Africa with 4500 branches. Only 5 out of the 89 banks were able to recapitalize to N25 billion, actually causes the need for the vane reform policy make the Nigeria banking sector not be spectators sent to active plague in the ongoing world.

This reform policy has served as a means to combat unethical conduct in the banking sector, this point out the fact that the reform policy has in an attempt to restore confidence in the Nigeria banking sector, it was sanitation crusade which was tagged.

Operation keeps the banking sector clean.

1.2     STATEMENT OF THE PROBLEM

The Central Bank of Nigeria (CBN) has played any a vital role in upgrading bank sector as a capitalist to the Nigeria economy. This has help in the revival, rehabilitation and the clashing out of both insanity and fall banks from the banking sector.

The researcher of the opinion that Central Bank of Nigeria reform policy of recapitalization “consolidation” was divided towered the standardization of the banking sector which its international counterpart. The Central Bank of Nigeria has intends very prove this intention of globalization of the Nigeria sector to pose a better position of their counterparts in South Africa, South Korea, Singapore and Malaysia.

 

1.3     OBJECTIVE OF THE STUDY

The reform policy of the Central Bank of Nigeria act some specific aspect of the Nigeria banking sector where identify as the major internal point of focus by the Central Bank of Nigeria.

It’s the failure of the bank to meet up with the new development of the sector as regards the banking industry recapitalization to N25 billion and the bench mark which was imposed the shoos coring of the bank in their performance.

The major objective for this research work is to valuate hoe much impact has the Central Bank reform policy on the Nigeria Banking Sector and the National economy large as intended by the Central Bank of Nigeria between 1947 and 1954 when this reform were planned and recommendation made by the patron commission. This has effectively better up in 2004 by Professor Charles Soludo.

In the proper appraised of the objective of this work, the objective of this work will be restricted to;

  1. Know for the bank of Nigeria reform of recapitalization.
  2. Familiarize with the impact if the policy in the upgrading of the Nigeria banking sector.
  3. Understand the effect of the implement of the reform policy of recapitalization on the Nigeria banking sector.
  4. Ascertain the short coming of the banks in Nigeria banking sector.

1.4     SIGNFICANCE OF THE STUDY

The usefulness of the research will project is direct at all stakeholder and participation banking sector. More especially the participating of the banking in the Nigeria financial system as they are affected in one way of the other by the reform policy the Central Bank of Nigeria. The study actively shone the impact implication of the Central Bank of Nigeria reform policy on the recapitalization of bank from N2 billion to N25 billion as a measure for the improvement of the lost glory of the Nigeria banking industry as international banking sector.

Also the renewal of the drizzling economy to a buoyant and stable economy which the Central Bank has not fuel to direct its tentacles in the refurbishment of the financial system as a miracle of the Central Bank of Nigeria as regard its reform policy.

Finally, the student will be of great important to the general society as colossus to the embrace of the Nigeria banking sector, which constant viewing of the performance of the Nigeria banking sector, which has been its search light for a modification and total functionality of the sector to a specified expectations.

The research find and recommendation observed during the process of parking the work will be of great help and much influence to the banking sector and then acceptance of further reform that will be carried out subsequently by the Central Bank of Nigeria.

1.5     RESEARCH QUESTIONS

In an attempt of proper by and micro specking make a first view on the information of the banking sector by Central Bank of Nigeria to the better understanding of the reformation and a comprehensive evaluation of same the following:

  1. Does Central Bank of Nigeria reform policy improve the banking sector in Nigeria?
  2. Does the reform policy improve economy?
  3. Does Central Bank of Nigeria reform policy increase bank operation and efficiency?

1.6     SCOPE OF THE STUDY

This study was meant to high the basic important of the Central Bank decapitation policy reform of all ailing bank with speak reference to the Unity Bank Group Plc Ozoro. It cover to define analysis of how the Central Bank of Nigeria reform has improve the standard of banking in Nigeria to the standard of their international counterparts and see if there are needs for failure and consider reformation counterparts and see if there are needs for failure and consider reformation of the Nigeria banking sector to check for any skilled point of the sector in the failure in order not to cause a lot of damage to the financial system as a fulfillment of one important function of the Central Bank of Nigeria and its bid to upgrading of the Nigeria in banking subsection with their international counterpart so also to meet up with the stipulation of the world bank and International Monetary Fund (IMF).

Making the study more complex on economic development the reform carried out by the Central Bank of Nigeria on the Nigeria banks as it has been duly followed by the other financial sector like the insurance commission has emancipated a fully recapitalized financial system and the procumbent of foreign investment as to portray the stewardship of Nigeria banking sector.

This imply the fully participation to government and it spares total in the antiquation to renovate and review the Nigeria banking system to meet up with other spirit. The study will also highlight the impact of the Central Bank of Nigeria reform policy of recapitalization on the Nigeria banking sector within the Nigeria metropolis and the embrace given by the Nigeria bank in the quest for improved banking and financial environment.

1.7     LIMITATION OF THE STUDY

In the course to seeming of the fail competition the research work. Some problem are likely to be observed by the research based on his question for getting necessary and ideal information, ideal from people and the access to the accumulation of official documents, which tends to produce more real fact and facilitate the comprehensive completion of the research work.

Although, in the mist of sadist the might be room for some respondent to be interviewed and question are kept, problem like reluctance, unconcern, un-communication and certainty, being the problem “research” topic by lost and business of industrial respondent toward the research topic will be observed.

The average community man might not be aware of the research problem which posed a differ limitation to the successful completion of the research work as not willing sets factor one of the prior constraint that will come up in course of completing this project work, how and when to get in touch with practitioner and guns in the field of banking that can supply reliable and needed information about the research topic might have a direct or an indent effect on the work.

1.8     OPERATIONAL DEFINITION OF TERMS

For the purpose of guideline the following definition may be applied.

1.8.1  RECAPITATION:

This is the charged up capital reserve of commercial banks with the Central Bank of Nigeria (CBN) as stipulated by relatives authority with effect on the subject banks

1.8.2  PAID UP CAPITAL:

Paid up capital is the amount of bank asset that is required to be deposited with the Central Bank of Nigeria. This could be ordinary share plus non redeemable preference shares.

1.8.3  CONSOLIDATION:

This is the ability to make ones prior position stronger or maintenance of the level of achievement.

1.8.4  RESERVE:

All reserve except assets, revolution surplus resulting from relevant in the course of consolidation.

1.8.5  MERGE:

Acquisition is the taking over of the smaller entity (banks) by a stronger and powerful entity.

 

 

 

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