ABSTRACT
Banking is in the midst of change that has arisen
due to economic depression. As government seek to improve economic efficiency
and better allocation of resources to solve the problem of economic depression,
policy makers are shifting towards openness, competitiveness and market
discipline.
In response to the developments, Deposit Money Banks
in Nigeria
The writer made efforts to discuss issues, facts and
environmental factors surrounding the wave of deposit money banks’ survival in
a depressed economy like Nigeria
The impact of this research in banks was gleaned
from five performance indicators namely total assets, total deposits, loans and
advances, profit before tax and shareholders’ funds, of First Bank of Nigeria
Plc. The research looked at the position of these indicators before and after
the sanitizing exercise undertaken by the banks for survival and also, its
impact on the entire banking system bearing in mind the effect of globalization
on the financial market in particular and the economy at large.
Chapter four shows the presentation and analysis of
First Bank’s financial statement with the use of chart, tables, bar chart and
graph.
Chapter five summarizes all that was discussed from
chapter one to four and gave suggestions on how deposit money banks can survive
in a depressed economy.
Finally, this researcher leaves this work open to
constructive criticisms and expects future scholars to delve into further
research and improve on this work.
TABLE OF CONTENTS
Page
Title Page - - - - - - - i
Approval Page - - - - - - ii
Certification Page - - - - - - iii
Dedication - - - - - - - iv
Acknowledgement - - - - - v
Abstract - - - - - - - vii
Table of Contents - - - - - - viii
CHAPTER ONE: INTRODUCTION
1.1 Background
of the Study - - - - 1
1.2 Statement
of the Problem - - - - 9
1.3 Objectives
of the Study - - - -
11
1.4 Research
Questions - - - - 12
1.5 Scope
of the Study - - - - - 12
1.6 Significance
of the Study - - - - 13
1.7 Limitations
of the Study - - - - 14
1.8 Definition
of Terms - - - - 15
CHAPTER TWO:
2.0
Review
of Related Literature - - - 1
2.1 Issues
in Bank Survival - - - - 17
2.2 An
Overview of the Operating Environment for
Nigerian
Deposit Money Banks - - - 19
2.2.1 The Macro-Economic Environment - - 20
2.2.2 Industry Environment - - - - 29
2.2.3 The Regulatory Environment/Legal
Framework - 32
2.3
The
Business Process Re-Engineering (BPR) Option - - 35
2.3.1 Origin and Meaning of the BPR Concept
- - -
35
2.3.2 Fundamental Breakthrough Required for
Reengineering
Services in Banks - - - - - - -
- 36
2.3.3 Key and Methodology for Carrying Out
a BPR Project in Banks 42
2.3.4 The Role of BPR in the Survival and
Sanitizing of the Nigerian
Deposit Money Banks - - - - - -
47
2.3.5 Positive Effects of BPR To the
Banking Sector - - 50
2.4
The
Merger and Acquisition Option - - - - 52
2.4.1 Meaning of the Concept Merger and
Acquisition - - 52
2.4.2 Legal Issues in Merger and
Acquisition - - - 55
2.5
Synergy:
An Efficiency Indicator in Bank Sanitizing - - 56
2.6
Nature
of Deposit Money Bank in Nigeria
2.7
A
Historical Overview of First Bank of Nigeria Plc - - 60
2.8
Depressed
Economy - - - - - - 62
2.8.1 Causes of Economic Depression - - - - - 63
CHAPTER THREE:
3.0
Research
Methodology - - - - - - - 65
3.1 Research
Method - - - - - - - 65
3.2 Determination
of Population size of the Study - - 65
3.3 Determination
of Sample size - - - - - 67
3.4 Method
of Data Collection - - - - - 68
3.5 Method
of Data Analysis/Interpretations - - - 69
CHAPTER FOUR
4.0
Data
Presentation and Analysis- - -
- - 71
4.1 Financial Statement of First Bank
Plc for the Month ended 31st March - - -
- 71
4.2 Analysis of Total Assets - - - - -
- 73
4.3 Analysis of Total Deposits- - - - - - 77
4.4 Analysis of Loans and Advances- - - -
- 80
4.5 Analysis of Profit Before Tax -
- - - -
86
4.6 Analysis of Shareholders’ Funds- - -
- - 89
CHAPTER FIVE
5.0
Summary,
Conclusion and Recommendation-
- - 93
5.1 Summary
- - - - - - - - -
93
5.1.1 Total
Assets - - - - - - -
- 93
5.1.2 Total
Deposits - - - - - - -
93
5.1.3 Loans
and Advances - - - - -
- 94
5.1.4 Profit
Before Tax (PBT) - - - - -
- 95
5.1.5 Shareholders’
Funds - - - - -
- 95
5.2 Conclusion
- - - - - - - - 96
5.3 Recommendation - - - - - - - 96
Bibliography - - - -
- - - - 99
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigerian economy is faced with
national and global economic challenges and as such, the financial institutions,
especially the banking sector has an option of sanitizing and restructuring its
operational processes in order to survive the depressed economy, as well as
embarking on a consolidation exercise which would have some wider structural
effects on the industry and on the economy as a whole.
Basically, banking is a service
industry operated by human beings for the benefit of the general public while
making returns to the shareholders. As
such, it is natural that the services provided thereof by the industry cannot
be 100% efficient; however, there is always a room for improvement. It is on this statement that the index of our
further discussion on this study is based.
The banking sector in the third world
economies has been grossly under managed when compared with their counterparts
in the developed countries of the world.
This has made it imperative for Nigerian banks to sanitize and
restructure their operational processes so as to be in line with the global
trends, and to survive the depressed economy.
Before the introduction of Structural
Adjustment Programme (SAP) in 1986, the banking sector was characterized by few
banks. The operators of these banks had
almost total control of the business of banking as customers had to look for
their services which most of the times were of poor quality. The managers, because of the pressure to
provide banking services, had little time to market their bank services or
design new products to improve their customers’ service and at the same time,
they received changes based on the approved tariff. Competition was minimal and customers could
spend long hours trying to obtain service in the banking hall due to long
queues.
The quality of the bank staff was
poor. They were rude to their customers
and most of the time; they felt they were doing a favour to their customers. As at that time, no Nigerian bank had neither
a simple computer nor a network of computers for online banking. In the area of credit appraisal, Ezeikpe (1993) observed that they were two
conservative in extending credit facilities.
The system was highly under banked while the payment mechanism was
filled with imperfection such that locally drawn cheques took more than one
week to clear.
However, with the introduction of
Structural Adjustment Programme (SAP) and its policy of deregulation and liberalization,
some structural reforms were ushered into the banking sector. By this policy, direct management and rigid
controls in banking and security business by the government were de-emphasized
for a broad based and private sector driven process. Laws inhibiting competition were removed to
ensure that banks are reasonably sound, competitive and efficient.
The traditional reforms were aimed
towards achieving the following objectives:
1. A
strategy for competition.
2. A sound organizational structure and effective
management to support the strategy.
3. To ensure management of critical
financial and operating risks in banking.
4. A system for planning, budgeting and
measuring performance.
5. Entrenching a programme for human
resource management.
6. Ensuring a strong and effective internal
control.
7. Putting in place the most appropriate
Information Technology (IT) to automate the process. Without any doubt, this policy was geared
towards enabling banks to respond flexibly to monetary conditions and to
facilitate an effective mechanism for transmitting the effect of monetary
policy to the real sector.
The policy of liberalization ushered in an era of bank
proliferation and reduction 
