Evaluating Mergers and Acquisition as Strategic Interventions in the Nigerian Banking Sector: The Good, Bad and the Ugly

Abstract

<p>This study evaluated Merger/Acquisition as an intervention strategy in the Nigerian banking sector. The objective was to identify whether this strategy has actually achieved the desired result for which it was purposed, especially, in the popular Nigerian merger of 2005. To this end, the study was carried out using both primary (questionnaire) and secondary (banks financial statements) data. 100 copies of questionnaire were administered on the management members of the sampled banks. From the three hypotheses that were tested; hypothesis 1 result revealed the calculated t-statistics (t = 6.591 P < 0.05) signifying that, Merger/Acquisition had helped to curb the distress that would have occurred in the Nigeria banks during the period it was executed. Hypothesis 2 which measured performances in pre and post-merger showed that, the average capital of banks sampled in pre Merger period was N1433.20 million while post Merger period was N6358.76 million and the difference was statistically significant at 0.05 level (t = 6.755, P < 0.05). Profit recorded for pre Merger period was N 2192.48 million while post Merger profit was N16839.12 million thereby creating significant differences between pre and post Merger profit which was statistically significant at 0.05 level (t = 5.276, P < 0.05), implying that, banks performance in post Merger was significantly different from the performance before Merger. Hypothesis 3 evaluated whether bad corporate governance was responsible for this merger; the calculated t-statistics was (t = 3.197, P < 0.05) and it was decided that there would not have been need for merger if good corporate governance had been in place. Based on these findings, it was recommended that merger/acquisition should not be hastily implemented; rather, it should be carefully applied when the objective for the intending firms is to achieve synergy; and that, corporate governance should be given priority attention by both the regulatory agencies and shareholders so that erring bank directors can be sanctioned appropriately.</p

Mergers and Acquisitions in Africa: A Review and an Emerging Research Agenda

“…Domestic deals seem to be driven particularly by regulatory reforms, overcoming poor corporate governance, fostering national economic development, and improving efficiency and market power (e.g. Agundu & Karibo 1999;Anifowose, Genty, & Atiku 2011;Emeni & Okafor 2008;Oghojafor & Adebisi 2012). In contrast, cross-border deals are much more likely to be motivated by access to raw materials, large consumer markets, and markets with low penetration rates (e.g.…”

Banking Sector Capitalization and Deposit Money Banks’ Profitability in Nigeria

“…In the same vein Oghojafor (2012) noted that the same banks recorded average profit of N2192 .48 million during the pre-merger period while the postmerger period increased significantly to 4 1683912 million. The test also shows that the mean difference between banks profit in pre-merger and post-merger periods was equally statistically significant at 0.05 level (t 5.276>p< 0.05.…”

The Role of Effective Leadership Style in Successful Merger and Acquisition Growth Strategy of Ecobank Ghana

“…This finding also came up for discussion in a study initiated by Oghojafor and Adebisi [23] which revealed that owing to strong leadership styles, some employees of banks in Nigeria which were taken over by stronger banks had their salaries increased by up to 100% and this boosted their morale thereby working harder than previously to ensure that target sets are achieved if not exceeded. Generally, Kithitu et al [17] are with the conviction that MandA strategies under strong leadership styles, work better in banks when employees in consolidated banks are exposed to enviable emoluments with fringe benefits.…”