EFFECT OF MERGER AND ACQUSITION ON THE FINANCIAL PERFORMANCE

OF DEPOSIT MONEY BANKS IN NIGERIA

(A STUDY OF ACCESS BANK PLC)

BY

ARUMONA EMMANUEL OWOICHO

17261216

DEPARTMENT OF ACCOUNTING
FACULTY OF MANAGEMENT SCIENCE
UNIVERSITY OF ABUJA,

FEBUARY 2023

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 DECLARATION

I hereby declare that this project was written by me and is the report of my research work. All

quotation is duely cited and the sources of information specifically acknowledged by means

of references.

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ARUMONA EMMANUEL OWOICHO DATE

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 CERTIFICATION

This is to certify that this project titled “Effect of Merger and Acquisition on The Financial

Performance of Deposit Money Banks in Nigeria" has been duly presented to the department

of Accounting, Faculty of Management Sciences, University of Abuja, for its' contribution to

knowledge and literally presentation.

------------------------------------------------------ ----------------------------------------------
MRS. KAKA ABDULLAHI DATE

------------------------------------------------------ - ----------------------------------------
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DR. K.F.A IBRAHIM DATE
(HOD ACCOUNTING)

------------------------------------------------------ - ----------------------------------------
------
EXTERNAL EXAMINER DATE

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 DEDICATION

I dedicate this project to the Almighty God for seeing me through my project research.

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 ACKNOWLEDGEMENT

In the course of this project, I sincerely express my appreciation to the following;

To God Almighty for His divine intervention, wisdom, knowledge and guidance through out

my programme. It was God who gave me the privilege to be where I am today.

My profound gratitude goes to my supervisor, Mrs Kaka Abdullahi, my H.O.D, Dr K.F.A

Ibrahim and to all my lecturers.

To my dearest parents Dr. Jonah and Mrs. Patricia Arumona, my siblings; Victoria, Samuel,

Paul and Chris, for always being there for me and I pray that God continue to bless you all in

all life's endeavors.

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TABLE OF CONTENTS

Title Page i

Declaration ii

Certification iii

Dedication iv

Acknowledgment v

Table of content vi

Abstract vii

CHAPTER ONE: INTRODUCTION

1.1. Background of the study 1

1.2. Statement of the problem 3

1.3. Research questions 4

1.4. Objectives of the study 4

1.5. Statement of hypothesis 5

1.6. Scope of the study 5

1.7. Scope of the study 6

CHAPTER TWO:

2.1. Introduction 7

2.2. Concept framework 7

2.3. Theoretical framework 12

2.4. Empirical review 16

2.5. Summary 19

CHAPTER THREE: RESEARCH METHODOLOGY

3.1. Introduction 20

3.2. Research Design 20

3.3. Population and sampling technique 20

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3.4. Source and method of data collection 21

3.5. Procedure for data analysis and model specification 21

3.6. Justification of method 24

3.7. Summary 24

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1. Introduction 26

4.2 Data presentation and analysis 26

4.3 Test of Hypothesis 30

4.4 Discussion of Findings 31

4.5 Summary 31

CHAPTER FIVE: SUMMARY CONCLUSIVE AND RECOMMENDATIONS

5.1. Summary 33

5.2. Conclusion 33

5.3. Recommendation 34

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 ABSTRACT

The objective of this research is to examine the effect of merger and Acquisition on the
financial performance Of Deposit Money Banks in Nigeria. The research was done on 24
listed banks that have undergone consolidation between 2008 and 2020. The study employed
Descriptive statistics and the result illustrated that the variable is a positive and significantly
correlated to merger and acquisition while merger and acquisition is found to have a positive
and significant effect on equity base, loan portfolio and deposit base. Other than that, the
study used the judgemental sampling aa a sampling technique. the findings shows that the
equity base, loan portfolio has effect on merger and acquisition. The recommendation is to
use other financial rations that have not been used in the study with wider time span and
greater sample size to portray a clearer picture for the management of deposit money banks,
government and its' agencies and shareholders advantage whether to consolidate other
deposit money banks to increase their financial performance.

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 CHAPTER

INTRODUCTION

1.1 Background of the Study

Globally, banking sector is an integral part of an economy and performs a crucial and

effective role in the development process. Through intermediation functions, banking sector

makes available the funds from the supply side of the economy to the demand side for

investments purposes. It also facilitates payment system for ease transaction process in the

economy through electronic payment. In most cases, monetary authorities through banks

implement various monetary policies to fine-tune the economic stability of a country.

Unsurprisingly, successive government all over the world evolve an efficient banking system

in order to stimulate macroeconomics polices and improve productivity. Specifically in

Nigeria, banking sector has witnessed a tremendous growth over the past few years which is

reflected in the number of banks, total deposits, total investments, capital base, total loans

and advances and the profitability of in sector (Gazia and Sahar, 2013; Khadijat et al., 2012;

Uremadu, 2007).

However, despite the recent growth, banks in Nigeria still operate in a dynamic environment

affected by myriad of factors that created opportunities for the strong ones and causes distress

for the feeble (Okereke, 2004). One of these factors is the adequate capital base for all the

banks to perform different services to the society which is a fundamental basis for strong,

sound and safe banking system. Okereke (2004), argued that an adequate capitalization will

give a bank a competitive edge at both global and local markets and enables it to offer better

services and eventually increase its earnings. In the recent past and before rampant

consolidation, Nigeria banks have not been adequately capitalizing due to weak ownership

structure, director’s greediness, lack of proficiency and many others.

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All these deficiencies led to early failure of banks, collapse of weak banks and incessant

banks runs which deterred the image of the bank and reduce customer’s confidence.

Furthermore, Abiola (2003), stated that distress and chronic illiquidity are the myriad of

factors that have been hampering the efficiency of banking sector.

Distress is a situation in which the bank is having financial, operational and managerial

problems. The first indigenous bank (the industrial and commercial bank) established in

1926 failed in 1930. By 1968, 19 out of 23 indigenous banks established had failed and in

1995, 60 out of 115 banks in Nigeria were considered to be distressed (Umoh, 2004). Prior to

2004 consolidation exercise; the performance of Nigeria’s banks was characterized by a high

regime of insolvency, vulnerability to systemic financial crises and macro-economic

instability (Obideyi, 2006). The capital base of the banks was so low that they could not

absorb losses occasioned by non-performing risk assets, keen competition and poor

management. Okpanachi (2011), observed that most Nigerian banks could not perform well

due to operational hardship and expansion bottlenecks as a result of heavy fixed and

operating costs. There were also serious cases of insider abuse, loss of confidence by the

customers and shareholders of the banks (Security and Exchange Commission SEC, 2005).

To curb the foregoing challenges, monetary authorities adopt several polices framework

which led to the introduction of merger and acquisition in the banking sector. The idea of

mergers and acquisitions in banking industry started in October, 2003. Although, the Central

Bank of Nigeria rolled out incentives to encourage weaker banks to adopt mergers and

acquisitions. These incentives included concessionary cash reserve ratio on a case- by -case

basis for a period of two years to the newly restructured banks, conversion of overdrawn

positions of weak banks to long-term loans with concessionary interest. The acquired banks

could be given up to 24 months grace period for complying with the minimum liquidity ratio

requirement to enable it settle down as a newly recapitalized/restructured bank. However,

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most of the feeble banks were unwilling to comply until the new order in 2004 (Famakinwa

et al., 2004). The reforms are directed at maintaining a sound and efficient banking system for

the protection of depositors, encouragement of efficient financial intermediation, competition,

maintenance of confidence and stability of the banking system, and protection against

systematic risk and collapse (Alashi, 2003).

For instance; in 2007, Stanbic bank merged with IBTC bank. In 2011, Access Bank acquired

Intercontinental Bank plc, Ecobank acquired Oceanic Bank, while First city monument bank

plc (FCMB) acquired Fin bank plc, Keystone bank was formed and not long after, it took

over Platinum Habib Bank (PHB), and Afribank were taken by AMCON. In 2014, Skye bank

plc acquired Mainstreet bank ltd. And in the same year, Heritage bank plc acquired Enterprise

bank plc (Kayode, 2014). In 2018, Access bank later merged with Diamond bank while Sky

bank plc operating licence was revoked by apex bank and was taken over by new entity,

Polaris bank limited in 2018, due to waves of mergers and acquisitions taking place in the

Nigerian banking industry raised an important question of whether mergers and acquisitions

enhance banking sector's performance in Nigeria. Hence, the need to empirically analyze the

effect of Merger and Acquisition.

1.2 Statement of the problem

Business organizations are recently seeing mergers and acquisitions as an alternative means

of re-capitalizing. Notably, in all human endeavours, there is bound to be successes or

failures and the Nigerian banking industry has proven to be no exception to this. The distress

syndrome which had crept into the Nigerian banking sector since the early 1990s has

persisted and this has brought chronic systemic crisis. Although, the consolidation policy

which was largely exhibited through the medium of mergers and acquisitions seemed to have

led to enhanced capital base for deposit money banks in Nigeria as well as transforming them

into stronger players in regional and global banking environment, the extent to which this

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wave of bank mergers and acquisitions has transformed the sector and boosted the confidence

of the customers, the investors and the shareholders' needs to be assessed. The ability of the

banks to increase their market power and take full advantage of the benefits accruing to

mergers and acquisitions of organizations which ultimately enhances the performance of the

banks, especially through the financing of the real sector of the Nigerian economy is not in

doubt. Therefore, the research work seeks to investigate and evaluate the significance of

mergers and acquisitions to banks' financial performance in Nigeria. The performance of

deposit money banks can be measured using equity base, total loan portfolio and deposit.

1.3 Research Questions

For this study, the following are the major research questions:

• How has merger and acquisition contributed to the equity base of deposit money

banks in Nigeria?

• How has merger and acquisition contributed to the total loan portfolio of deposit

money banks in Nigeria?

• How has merger and acquisition contributed to the total deposit base of deposit

money banks in Nigeria?

1.4 Objectives of the Study

The objectives of the study will be achieved by evaluating the effect of mergers and

acquisition on deposit money banks by analyzing the growth strategy used by Diamond bank

plc. This is purely achieved through mergers and/or acquisitions of other banks. The

following will be the objectives of the study:

• To identify the contributions of merger and acquisition to the equity base deposit

money banks in Nigeria.

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 • To identify the contributions of merger and acquisition to the total loan Portfolio

of deposit money banks in Nigeria.

• To ascertain the effect of merger and acquisition on the total deposit base of

deposit money banks in Nigeria.

1.5 Statement of Hypothesis

The following hypothesis is formulated for the purposes of this study;

Ho1: Merger and acquisition has no significant effect on the equity base of deposit money

banks in Nigeria.

Ho2: Merger and acquisition has no significant effect on total deposit base of deposit money

bank in Nigeria

Ho3: Merger and acquisition has no significant effect on the total deposit base of deposit

money banks in Nigeria.

1.6 Significance of the Study

The research hope that at its completion, it will contribute immensely to the existing literature

of the effect of merger and acquisition on financial performance of deposit money banks in

Nigeria and access bank plc in particular. It will as well be beneficial to students of various

learning and other research in the area of merger and acquisition beyond the field of

accounting. This study will help in the management of deposit money banks and also

government and its agencies especially those that are established to regulate and approve

merger and acquisition proposal. Shareholders will find this study important on how to

increase shares during the merger process in order to experience a dilution of voting power

and will help in the significant volatility in stock price.

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1.7 Scope of the Study

This study covers only two strategies namely, Merger and Acquisition Strategies

(Independent Variables). The Performance Variable to be covered shall include equity base,

total loan portfolio and deposit base (Dependent Variables) of deposit money bank with

respect to Access Bank Plc. It will make reference on the need for investigating publicly to

understand the financial implication or involvement in merger and acquisitions before

embarking on it.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This research focuses on the effect of merger and acquisition on the financial performance of

deposit money banks in Nigeria. In this chapter, the research will be focusing on the

conceptual framework, the theoretical framework and the empirical review of the study.

2.2 Conceptual Framework

The current study is examined to recognize the effects of merger and acquisition on the

financial performance of deposit money banks. The study examines both the positive and

negative effects for deposit money banks in merger and acquisition. The study scrutinizes the

issues by using the perspective of history, motives and methods to determine merger and

acquisition value. Although, the field of merger and acquisition research is far too broad and

more complex to be covered in a review paper, therefore, the study attempts to start covering

some issues such as the distinctions between merger and acquisition, the need for merger and

acquisition as well as the history of merger and acquisition (both global history and the

Nigerian history).

The then Diamond Bank had faced the possible revocation of its license due to its non-

performing loans of over N150 billion and the resignation of three of its directors and the

chairman of the board of directors. However, it was able to prevent this occurrence by

entering into a merger arrangement with Access Bank. This prevented Diamond Bank from

facing the same fate as Skye Bank Plc which had its license revoked in September 2018 due

to the depletion of its capital base. The CBN subsequently injected about N786billion into the

bank to shore up its liquidity and transferred the operations, assets and management of Skye

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Bank to Polaris Bank Limited, a bridge bank. Access Bank Plc in December 2018, announced

that it has merged with another lender Diamond Bank Plc. The merger will position Access

Bank as the biggest lender by assets in Nigeria. Following the completion of the merger,

Diamond Bank would be absorbed into Access Bank and will cease to exist under Nigerian

law. The current listing of receipt on the London Stock Exchange was also cancelled, upon

the merger becoming effective. The receipts on the London stock Exchange were also

cancelled, upon the merger becoming effective.

Diamond Bank’s shares on the Nigerian Stock Exchange and the listing of Diamond Bank’s

global deposit bank will retain the Access Bank name. The combined bank retained the

executive chief of bank will retain the Access Bank name and be led by Access Bank’s

current Chief Executive Officer, Mr. Herbert Wigwe (Balogun, 2019).

2.2.1 Concept of Merger

A merger is a combination of two or more companies in which the assets and liabilities of the

selling firms are absorbed by the buying firm (Sherman and Hart, 2006). It is also the

combination of two or more companies in creation of a holding company (European Central

Bank, 2000, Gaughan, 2002, Jagersma, 2005, Awasi Mohamad and Vijay Baskar, 2009).

According to Stedman (1993), merger simply means the coming together or amalgamation of

two or more companies or firms to form a new and bigger company or firm. A merger has

been statutorily defined in the Companies and Allied Matters Act (1990) as amended in

section 590 as an amalgamation of the undertakings or interest in undertaking of one or more

companies and one or more corporate bodies. Merger can be defined as an arrangement

whereby the assets of two companies become vested in or under the control of one company

(which may or may not be one of the two original companies) which has all or substantially

all the shareholders of the two companies (Weinberg and Blank, 1979).

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2.2.2 Concept of Acquisition

An acquisition is the purchase of shares or assets on another company to achieve a

managerial influence (European Central Bank, 2000, Chunlai Chen and Findlay, 2003, Awasi

Mohamad and Vijay Baskar, 2009), not necessarily by mutual agreement (Jagersma, 2005,

Awasi Mohamad and Vijay Baskar, 2009).

Angwin (1970) referred to acquisition as a takeover where the acquiring firm owns 100% of

the target and has purchased the entity of the acquired firm. As further noted by Angwin

(2007), the management of the acquiring firm assumes a superior position to the acquired in

which it is able to do whatever it wishes with all the resources, capabilities and the liabilities

of the acquired firm. This loss of ownership and control of the acquired is what prompted its

description as a takeover.

Also, an acquisition is the purchase of one business or company by another company or

business entity. Specific acquisition targets can be identified through myriad avenues,

including market research, trade expos, sent up from internal business units or supply chain

analysis. Such purchase may be of 100% or nearly 100% of the assets or ownership equity of

the acquired entity. Acquisitions are divided into “private and public” acquisitions, depending

on whether the acquire or merging company is or is not listed on a public stock market. Such

public companies rely on acquisitions as an important value creation strategy. An additional

dimension or categorization consists of whether an acquisition is friendly or hostile.

Achieving acquisition success has proven to be very difficult while various studies have

shown that 50% of acquisitions were unsuccessful. Serial acquirers appear to be more

successful with merger and acquisition than companies who make an acquisition only

occasionally (Douma and Schreuder, 2013). Akamiokor (1989) defines acquisition as a

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business combination in which ownership and management of independently operating

enterprises are brought under the control of a single management.

2.2.3 Concept of Merger and Acquisition

Merger is the “combination of all the assets, liabilities, loans and business of two or more

companies such that one of them survives.” Many firms across the globe have adopted the

strategy of merger and acquisition. The merger and acquisition are one of the important tools

to achieve economic growth through sound financial system. Merger is the ‘combination of

all assets, liabilities, loan and business of two or more companies such that one survives.’

Many firms across the globe have adopted the strategy of merger and acquisition to achieve

high growth in business. Godbole (2013), opined that merger and acquisition serves the

purpose of expansion, reducing the level of competition and creation of a large entity.

Mergers and acquisitions especially in the banking industry is now a global phenomenon. In

the United States of America, there had been over 7,000 cases of bank mergers since 1980,

while the same trend occurred in the United Kingdom and other European countries.

Specifically, in the period 1997-1998, 203 bank mergers and acquisitions took place in the

Euro area. In 1998 a merger in France resulted in a new bank with a capital base of US$688

billion, while the merger of two banks in Germany in the same year created the second largest

bank in Germany with a capital base of US$541 billion.

According to Soludo (2006), in Nigeria, the banking sector has undergone the consolidation

exercise, which was only aimed at recapitalizing the banks and increasing banks capital base

to #25billion but has had little or no significant impact because there are still weak banks as

a result of huge non-performing loans (Godbole, 2013). Thomsen (2018), revealed that the

two of the top three largest merger and acquisition deals in the first half of 2018 took place in

Nigeria with the largest being Milost Global Inc. $1.1 billion leveraged buyout transaction to

acquire the entire share capital of Prime Waterview Holdings Nigeria Ltd. The Global

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transaction report obtained by Sweet crude indicated that total M&A value in Nigeria and

other African nations was $4.4 billion in 2017.

The biggest transaction was the acquisition of Nigerian businesses of ConocoPhillips (COP)

by Oando in a transaction valued at $1.55 billion. In December 2012, Oando, through its

subsidiary Oando Energy Resources (OER), had entered into an agreement with COP to

acquire COP’s Nigeria businesses for a total cash consideration of US$ 541 billion. The

payment and government sign-off of the deal was concluded in 2014. This was followed by

acquisition of the entire issued shares of Mainstreet Bank Limited from Asset Management

Corporation of Nigeria (AMCON) by Skye Bank Plc for total consideration of N120 billion.

The report underlined the ongoing divestments by banks as major drivers for mergers and

acquisitions with nearly half of the transactions directly and indirectly related to the change in

banking regulatory framework (Thomsen, 2018).

2.2.4 Concept of Equity Base; (i) if the Company (or its successor by merger or otherwise)

has a class of common equity securities listed on a National Securities Exchange, the sum of

the value of all outstanding Common Units plus the liquidation preference of all outstanding

preferred Partnership Units, and (ii) if the Company (or its successor by merger or otherwise)

does not have a class of common equity securities listed on a national securities exchange, the

Net Worth of the Partnership. For purposes of clause (i) in the preceding sentence, the value

of all outstanding Common Units shall be equal to the product of (i) the number of

outstanding Common Units multiplied by (ii) the Conversion Factor, multiplied by (iii) the

30-day VWAP of the REIT Shares as of the date of the most recent quarterly financial

statement.

2.2.5 Concept of Deposit base; is to provide maturity transformation, banks need a deposit

base deposits that could be, but are not, withdrawn most of the time and are, thus, used for

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long-term lending. As depositors become more flexible in their bank relations, keeping

multiple accounts at different institutions, the deposit base of banks changes.

2.2.6 Concept of Loan portfolio; is the balance of all loans that the bank has issued to

individuals and entities, calculated on a specific date. The loan portfolio is one of the

reporting indicators that are part of the assets of a credit organization.

2.3 Theoretical Framework

2.3.1 Differential Efficiency Theory

According to differential theory of merger, one reason for a merger is that if the management

of company X is more efficient than the management of company Y then it is better if

company X acquires company Y and increases the level of efficiency of company Y.

According to this theory, if some companies are operating at a level which is below the

optimum potential of the company, then it is better if it is taken over by another company.

This theory also implies that the management of a company is also not efficient in running

the company and therefore, there are always chances that it will be taken over by other

companies. Differential theory can be particularly helpful when a company decides to take

over another company in the same industry because it would mean that company which is

taking over another company can expand without much cost because of the efficient

utilization of all their sources. However, there is one risk to this which is if the acquiring

company pays too much for acquiring the company but in reality, the resources do not get

utilized in a manner which is forecasted, then it can lead to problems for the acquiring

company (Brealey, 2001).

According to this theory, some firms operate below their potential and consequently have low

efficiency. Such firms are likely to be acquired by another, more efficient firms in the same

industry, this is because firms with greater efficiency would be able to identity firms with

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good potential operating at a lower efficiency. They would also have the managerial ability to

improve the latter's performance. However, a difficulty would arise when the acquiring firm

overestimates its impact on improving the performance of the acquired firm. This may result

in the acquirer paying too much for the acquired firm. Alternatively, the acquirer may not be

able to improve the acquired firm's performance up to the level of the acquisition value given

to it the managerial synergy hypothesis is an extension of the differential efficiency theory. It

states that a firm whose management team has greater competency than is required by the

current asks in the firm may seek to employ the surplus resources by acquiring and improving

the efficiency of a firm which is less efficient due to lack of adequate managerial resources.

2.3.2 Financial Synergy Theory

According to this theory, financial synergy occurs as a result of the lower costs of internal

financing versus external financing. A combination of firms with different cash flow positions

and investment opportunities may produce a financial synergy effect and achieve a lower cost

of capital, tax saving is another consideration. When the two firms merge, their combined

debt capacity may be greater than the sum of their individual capacities before the merger.

The financial synergy theory also states that when the cash flow rate of the acquirer is greater

than that of the acquired firm, capital is relocated to the acquired firm and its investment

opportunities improve (Leland, 2007).

2.3.3 The Hubris Theory

The theory of managerial hubris (Roll, 1986) suggests that managers may have good

intentions in increasing their firm's value but being over-confident; they over-estimate their

abilities to create synergies. The Hubris theory constitutes a psychological-based approach to

explain M&As. It states that the management of acquiring firms overrates their ability to

evaluate potential acquisition targets. This managerial over-optimism typically results in

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erroneous decisions which are overpriced (Trautwein 1990). Over-confidence increases the

probability of overpaying (Hayward and Hambrick, 1997; Malmendier and Tate, 2008) and

may leave the winning bidder in the situation of a winner's curse which dramatically

increases the chances of failure (Dong, 2006).

In an auction environment, the Winning bid is usually in excess of the estimated value of the

target company and is likely to represent a positive valuation error. The positive valuation

error represents the 'winner's curse. The winner is cursed in the sense that he pays more than

the company's worth. In particular, the hubris theory states that when a merger or acquisition

announcement is made, the shareholders of the bidding firm incur a loss in terms of the share

price while those of the target firm generally enjoy a contrary effect. The prime reason behind

this is that when a firm announces a merger offer to the target, the share price of the target

firm increases because shareholders in the target firm are ready to transfer shares in response

to the high premium that will be offered by the acquiring firm (Machiraju, 2010). The risk of

potential failure, due to overrated acquisition price which significantly exceeds the fair value

of the target company, increases in an auction. This phenomenon is the basis of the winner's

curse hypothesis that argues that the value of a target traded in an auction is usually lower

than the acquisition price (Hofmann, 2004).

2.3.4 Agency Theory

Merger and acquisitions can end up destroying value rather than creating synergies, even

though managers act fully rationally. The literature of agency theory throws light on how

managers’ interest in maximizing their own utility can lead to decisions that are not in the

interest of the shareholders. However, the decisions are fully conscious and are a result of

opportunism rather than irrational behavior (B Jarke and Peter,2010). The agency theory

assumes full rationality for both the owners and managers (Thomsen, 2008). Conflict of

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interest between the two parties will in agency theory be analyzed with an opportunistic

behavioral assumption. Hence, the agent will take advantage of the superior information to

own-benefit, as in what Gorton, Kahl and Rosen (2005) referred to as eat or be eaten mergers

decisions to protect managers’ job. The policy thrust of the agency theory is that most if not

all mergers and acquisitions bids are not to the benefits of shareholders and business owners

and may not yield any synergies since managers always have superior information of the

business prospects and would take advantage of every opportunity to satisfy their personal

interest.

2.3.5 Eat or be Eaten” theory of mergers

The “Eat or be eaten theory of mergers was propounded by Gorton, Kahl and Rosen (2005),

as a response to the various merger waves experienced in the United States in the 1960s up to

the late 1990s. Gorton, Kahl and Rosen (2005) combine elements of Neoclassical and

behavioural theories in a new theoretical framework called Eat or be eaten. The Eat or be

Eaten theory presents a model of defensive mergers and acquisitions. The theory argues that

mergers and acquisitions can occur when managers prefer that their firms remain independent

rather than be acquired. The theory further assumes that managers can reduce their chances of

being acquired by acquiring another firm and hence increasing the size of their own size. The

policy thrust of the “eat or be eaten” theory is that mergers and acquisitions could take place,

either to avoid being acquired by other firms, maintain company’s independence, increase a

company’s size or protect its managers’ job. In other words, managerial defensive motives

may be the reason for mergers and acquisitions as managers may want to make acquisitions

to increase firm’s size and hence reduce the likelihood of their firms being taken over.

This study is supported by the financial synergy theory; this is because, A combination of

firms with different cash flow positions and investment opportunities may produce a financial

15
synergy effect and achieve a lower cost of capital, tax saving is another consideration. When

the two firms merge, their combined debt capacity may be greater than the sum of their

individual capacities before the merger. The financial synergy theory also states that when the

cash flow rate of the acquirer is greater than that of the acquired firm, capital is relocated to

the acquired firm and its investment opportunities improve (Leland, 2007).

2.4 Empirical Review

Ikpefan (2013) carried out an empirical study on post-consolidation effect of mergers and

acquisitions on Nigeria deposit money bank. The study was carried out to find out the

challenges faced by the banks during and after the exercise, the performance of these banks

post-consolidation and if mergers and acquisitions has in any way affected the banks and if

so, in what ways? The panel data regression technique was used in the analysis and we found

that mergers and acquisitions affect banks performance but does not affect banks’ cost of

equity capital.

The previous studies on the relationship between banks mergers and acquisitions and bank

performance provided mixed evidence and many failed to show a clear banks relationship

between mergers and acquisitions and performance. Many researchers agreed that banks have

been able to significantly improve their profit potential through merger and they agreed that

merger and acquisition has helped Nigerian banks to be more efficient in financial

intermediation. The studies of Carletti et al. (2002) and Szapary (2001) provided the

foundation for research on the linkage between banks mergers and acquisitions and

profitability.

Joshua (2009) discovered that the post-merger and acquisitions period was more financially

efficient than the pre-merger and acquisitions period. Olagunju and Obademi (2012) also

found that there is significant relationship between pre and post mergers and acquisitions on

16
one hand and capital base of commercial banks and level of profitability on the other hand.

Walter and Uche (2005) posited that mergers and acquisitions made Nigerian banks more

efficient.

Elumide (2006) also agreed that mergers and acquisitions had improved competitiveness and

efficiency of the borrowing and lending operations of Nigeria banking industry. According to

Caprio Calomiris and Kerenski and De-Nicolo (2003), evidence suggested that mergers and

acquisitions in the financial system could impact positively on the efficiency of most banks.

With the use of chi square to test his stated hypothesis, Akpan (2011) found that the policy of

consolidation and capitalization has ensured customers’ confidence in the Nigerian banking

industry in terms of high profit.

Owolabi and Ogunlalu (2013) discovered that it is not all the time that consolidation

transforms into good financial performance of banks. DeLong and Deyoung et al.(2009) and

Amel et al. (2004) also found that mergers and acquisition have not had a positive influence

on banks performance in terms of efficiency. On the other hand, Beitel et al. (2004), found no

gain effect due to merger and acquisition in banking industry.

Chen Liang (2006) examines the impact of merger and acquisition announcements on firms'

stock performance made by companies listed on the Hong Kong stock exchange. An event

study methodology was used using 44 events as the sample size. The study found that merger

and acquisition announcement effect is significant over the period of event and investors can

earn abnormal return by trading an acquiring company 2 days before the announcement data.

Onaolapo and Ajala (2013) studied the effects of merger and acquisition on the performance

of selected commercial banks in Nigeria using the regression analysis through statistical

package for social sciences and found that post-merger and acquisition period was more

17
financially improved than the pre-merger and acquisition period on the seven selected banks

for a period for ten years (2001-2010).

Appah and John (2011) conducted research on mergers and acquisitions in the banking

industry, the findings reveal that the consolidation merger and acquisition activities in Nigeria

did not meet the desired objectives of liquidity, capital adequacy and corporate governance

which have resulted to more troubled banks after the consolidation.

Adetayo, Sajuyigbe and Olowe (2013) examined the impact of post-merger on Nigeria banks

profitability using the multiple regressions and the method of estimation is Ordinary Least

Square (OLS) with aid of STATA software. The result showed that post-merger has not

significantly impacted on banks profitability.

Suberu and Aremu (2011) conducted a study of corporate governance and merger activity in

the Nigerian Banking Industry using twenty-five (25) successful mergers arising from the

regulatory demand for consolidation. The major finding reveal that the Banking Sector is

partly responsible for the poor state of the Nigerian Economy through its support for the

import dependence nature of the economy rather than financing of sustainable economic

development through shareholder values maximization.

Onikoyi (2014) carried out research on mergers and acquisitions and performance in Nigeria.

Using the simple linear regression through review between 2003 and 2008 on two banks. The

result revealed that both groups produced in addition to operational and relational synergy,

financial gains far more than the synergistic effects. Ratio technique and inferential statistical

tools were used to highlight synergistic effects on the merging banks.

Okpanachi (2011) conducted a comparative analysis of the impact of mergers and

acquisitions on financial efficiency of banks in Nigeria. This paper used gross earnings, profit

18
after tax and net assets of the selected banks. For this paper, three Nigerian banks were

selected using convenience and judgmental sample selection methods using analyzed

applying t-test statistics through statistical package for social sciences. It was found that the

post-mergers and acquisitions' period was more financially efficient than the pre-mergers and

acquisitions period.

From the review of literature and empirical studies on the impact of mergers and acquisitions

on the performance of banks in Nigeria, scholars appear to have different conclusions. The

position of the scholars that posited positive relationship between merger and acquisition; and

bank performance make logical sense because the essence of mergers and acquisition is to

improve efficiency in financial intermediation thereby propelling the banks toward profit

maximization. It is therefore expected this study that post-merger periods will be better in

terms of efficiency than the premerger period.

2.5 Summary

In summary, this chapter started by reviewing the conceptual framework Which detailed on

the distinctions between merger and acquisition, the need for merger and acquisition, it also

gave the global history of merger and acquisition which talks about the evolution of merger

and acquisition focusing on the waves of merger and acquisition. The conceptual framework

also detailed on the merger and acquisition in Nigeria and gave a brief history of merger and

acquisition on Deposit Money Banks in Nigeria. This chapter also went further to review

some of the theories of merger and acquisition which includes Differential Efficiency theory,

financial synergy theory, the Hubris theory, agency theory, and the "Eat or be Eaten'" theory

of mergers. The chapter also reviewed the empirical study done by other researchers on the

same or related topic.

19
 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

In this chapter, this research will be focusing on the research design, the population, sampling

size and technique of the study, the method of data collection, the procedure for data analysis

and model specification and justification of method.

3.2 Research design

The research design that will be used for the study is the ex post facto research design. It is

used where the phenomenon under the study has already taken place. Previous data relating

to the subject matter will be collected to establish the relationship between the phenomenon

under study.

3.3 Population and Sampling Technique

3.3.1 Population of the study

The population consists of all the twenty-four (24) banks that scaled through the 2005

consolidation exercise. This includes all the banks that recapitalized through merger and

acquisition. All the banks that met the capitalization requirements of the CBN together with

their respective status during consolidation are shown in the appendix (Daniya Adeiza

Abdulazeez, Onotu Suleiman and Abdulrahaman Yahaya, 2016).

3.3.2 Sampling Technique

The study used judgmental sampling technique to select four (4) banks from the population.

The selected banks are those banks that retained their identities prior to and after the merger

and acquisition activities. To this end, only four (4) banks Oul of the banks that satisfied the

20
criterion were selected as the sample size of the study. Two of them are old generation banks

while the other two are new generation banks. The old generation banks are First Bank of

Nigeria (FBN) plc. and United Bank for Africa (UBA) plc. while the new generation banks

are Access bank plc. and wema Bank ple. (Daniya Adeiza Abdulazeez, Onotu Suleiman and

Abdulrahaman Yahaya).

3.4 Source and method of data collection

In order to meet the aims of the project, it is necessary to use secondary method for data

collection. Secondary data is the data collected by others to be re-used by the researcher. It is

also the data that have already been collected for purposes other than the problem at hand

(Malhotra, 2004). This data includes both quantitative and qualitative data and can be located

quickly and inexpensively (Proctor, 2003). According to Malhotra (2004), secondary data

can be classified as either internal or external. Internal data are those generated within the

organization for which the research is being conducted and it may be available in a ready-to-

use format or with considerable processing requirements to extract it. On the other hand,

external data are those generated by sources outside the organization. Through the method of

Desk research, it is possible to extract it in the form of published material, online databases or

information made available by syndicating services that include sources like Kearney Global

Retail Development Index, Foreign Direct Investment (FDI) Confidence Index, etc.

3.5 Procedure for data analysis and model specification

To conduct the investigation that examines the effect of merger and acquisition on the

financial performance of deposit money banks.

The two constructs include ‘financial performance’ and ‘merger and acquisition’. The model

for this study takes the following form:

21
Y=β0 +βXI +µ

y= financial performance (Dependent variables)

x = merger and acquisition (Independent variables)

β=Coefficient of merger and acquisition

µ=Error Term

Explicitly, equation 1 can be defined as:

Bank performance=f (merger and acquisition) + e

Representing equation two with the variables of the construct, hence the equation below is

formulated with inclusion of a control variable dummy. The dummy was critically included

because it would aid in the understanding of the effect of merger and acquisition in

explaining the level of financial performance obtainable. Furthermore, the inclusion of the

control would enhance a better predictability and analysis of the relationship existing between

the two constructs ('merger and acquisition' and financial performance'). Therefore,

BPERF= f(EQB, LNP, DPB).... Equation 1

Relationship between merger and acquisition, equity base, loan deposit base and

deposit base which can be written in Linear form:

M&A = β0+βI EQBit+β2LNPit + β3DPBit….+µit……Equation2

Where:

M&A= Merger and acquisition

EQB= Value of bank equity base

22
LNP= Bank loan portfolio

DPB= Bank deposit base

For the models,β1>0, β2>0, β3>0, β4>0

Our prior expectation about the relationship between merger and acquisition and ‘financial

performance’ is that merger and acquisition have a significant effect on the financial

performance of banks. This paper employs that panel data framework for the analysis due

basically to its advantage of giving more data points. Estimation of the model will be done

through the statistical t-term since the study is meant to study a pre and post-merger and

acquisition periods. Panel regression techniques are used because it has the following

advantages. First, it has the advantage of giving more informative data as it consists of both

the cross-sectional information, which captures individual variability and the time series

information which captures dynamic adjustment. Unlike time series studies which plagued

with multi-collinearity issues, panel data gives less collinearity among the variables, more

degrees of freedom and more efficiency. Hence, this will be useful in effectively studying the

effects of the independent variables on financial performance. Most studies used the E-views

5.0 package but this study will use the Stata 13 package in order to be able to test between

both pre and post-merger periods.

Yt= C+β1tX1t + β2t X2t +………+βitXit+Uit

Where: Yt= dependent variable

C= intercept

Xt= independent variables; and

Ut= error term (Mills, 1999)

23
T-test Analysis and Decision Rule

The study adopted the t-test statistics to compare the two periods. Two years were selected.

These are two years to the merger and two years after merger these are 2003 and 2007. The

financial statements for the two years were obtained from the Nigerian Stock Exchange

(NSE) 2009-year book and also from the websites of the selected banks.

The hypothesis formulated in Chapter one will be tested at 10% level of significance

otherwise we do not reject the null and reject the alternative hypothesis.

The decision rule is to reject the null hypothesis if the tabulated value is higher than the

calculated value at 10% level of significance otherwise, we do not reject the null and reject

the alternative hypothesis.

3.6 Justification of method

We may be interested in quantifying the extent to which two variables are related. This

project uses the descriptive statistics to identify the changes over the period of the study. In

the discussion of cross tabulations, we often wanted to determine whether two variables in a

data set were related in some manner. ln this regard, we were able to state, to a certain

specified statistical significance, that the variables did or did not have some kind of

relationship. Although, this hypothesis is procedure for cross tabulations is indeed helpful, it

does not quantity the degree to which the two variables are related. In this project, we will

consider such a method of quantifying the relationship between two statistical variables.

3.7 Summary

In summary this chapter started by reviewing the research design and gave detail on the

population and sampling technique, it gave the source and method of data collection. The

chapter also stated clearly the procedure for data analysis and model specification. ln this

24
regard, we were able to state, to a certain specified statistical significance, that the variables

did or did not have some kind of relationship.

25
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

This chapter focuses on the presentation and analysis of the data using t-test value of the

variable, and their implication.

4.2 DATA PRESENTATION AND ANALYSIS

The data were extracted from the financial report of the accounts of the sampled firms for the

period being studied. The period studied are representing two years to and after the merger

and acquisition exercise in Nigeria. These financial reports and accounts include the

statement of comprehensive incomes and statement of financial for the periods.

4.2.1 Descriptive Statistics

The descriptive statistics in this study is used to provide simple summaries about the samples

selected for the study. The analysis enables us to have first-hand information of the key issues

for this research work. The mean, minimum, maximum and the standard deviation of the

variables under study provides answer to whether they are positive or negative changes in the

pre and post periods of the merger and acquisition. The raw data used for the descriptive

analysis are presented in the appendices. The variables series include total equity, total loans

and the deposit base of the sampled banks. The summary of these statistics are presented in

table 1 below.

26
4.2.2 PRE ACQUISITION RESULT

TABLE 1

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

Return on
4 .48 2.59 1.5925 1.12370
Asset

Loan 4 6505420.00 33317281.00 17319633.2500 12837603.83461

Equity 4 595169.00 184830757.00 49700320.7500 90201793.11310

Deposit 4 9308990.00 405657055.00 132985339.2500 184586247.30909

Valid N
4
(listwise)

Source: SPSS Result

The descriptive statistics in the table above shows the average mean of the equity of the four

deposit money banks is 49700320.7500 while the loan deposit base are 17319633.2500 and

132985339.250 respectively. The minimum and the maximum equity before merger and

acquisition period are 595169.00 and 184830757.00 respectively with the standard deviation

of 90201793.11310. The minimum and the maximum loan in the before merger and

acquisition period are 6505420.00 and 33317281.00 respectively with the standard deviation

of 12837603.83461. also the minimum and the maximum deposit base in the period are

9308990.00 and 405657055.00 respectively.

27
4.2.3 POST ACQUISITION RESULT

Table 2:

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

Return on
4 .60 1.71 1.1465 .45611
Asset

Equity 4 3507860.00 172002026.00 67720015.5000 78213053.35657

Loan 4 9704997.00 220500000.00 72089374.7500 99770284.33770

Deposit 4 11852550.00 351789279.00 130579449.2500 155497768.51630

Valid N
4
(listwise)

The descriptive statistics in the table above shows the average mean of the equity of the four

deposit money banks is 67720015.5000 while the loan deposit base are 72089374.7500 and

130579449.2500 respectively. The minimum and the maximum equity in the post-acquisition

period are 3507860.00 and 172002026.00 respectively with the standard deviation of

78213053.35657 the minimum and the maximum loan in the post-acquisition period are

9704997.00 and 220500000.00 respectively with the standard deviation of 99770284.33770.

also, the minimum and the maximum deposit base in the period are 11852550.00 and

351789279.00 respectively.

Form the descriptive statistics above, in all the variables considered, the post merger result

has higher figures in mean, minimum and maximum that the pre-merger figures in respect of

the equity, loan and deposit base which proxies for the performance of deposit money banks.

This shows that merger and acquisition in respect of the sampled deposit money banks has

28
positive and significant effect on the financial performance of deposit money banks in

Nigeria.

4.2.4 Tests, Result and Analysis

T-Test Result

Table 3:

Mean Mean difference

Post M&A Pre M&A

Equity 67720015.5000 49700320.7500 18019695

Loan 72089374.7500 17319633.2500 54769742

Deposit 130579449.2500 132985339.2500 -

2405890

Table 3 above shows the mean of the two groups of data which is the pre and post M&A, for

the equity the mean for the post M&A amounted to 67720015.5000 and the pre M&A is

49700320.7500 which resulted to the mean difference of 18019695. The second row of the

table above show the mean for the loan for the pre and post M&A which amounted to

72089374.7500 and 17319633.2500 respectively giving the mean difference of 54769742.

Finally, the third row contains the mean of the deposit base post and pre M&A which is

130579449.2500 and 132985339.2500 respectively and giving the total mean difference of -

2405890

29
4.3 TEST OF HYPOTHESES

The hypothesis are hereby restated;

Ho1: Merger and Acquisition has no significant effect on the equity base of deposit money

bank in Nigeria.

The table 3 above shows the difference between the pre and post M&A on the total Equity

base on Deposit money banks in Nigeria. The result shows a positive mean difference value

of 18019695 thus the null hypothesis is rejected. The alternative hypothesis which posits that

merger and acquisition has significant effect on total equity base of deposit money banks is

therefore accepted. Therefore, the study concludes that Merger and Acquisition has a positive

effect on the equity base of deposit money bank in Nigeria.

Ho2: Merger and Acquisition has no significant effect on the total loan portfolio of deposit

money banks in Nigeria.

The table 3 above also shows difference between the pre and post M&A on the total loan

portfolio of deposit money bank in Nigeria. The result shows a positive value of 54769742

thus the null hypothesis is rejected and the alternative is accepted. Therefore, the study

concludes that Merger and Acquisition has a positive effect on the total loan portfolio of

deposit money banks in Nigeria.

Ho3: Merger and Acquisition has no significant effect on the total deposit base of deposit

money banks in Nigeria.

The table 3 above shows the difference between the pre and post M&A on the total deposit

base of deposit money banks in Nigeria. The result shows a negative value of -2405890 thus

the null hypothesis is not rejected. The alternative hypothesis which posits that merger and

acquisition has significant effect on total deposit base is rejected. Therefore, the study

30
concludes that Merger and Acquisition has a no significant effect on the total deposit base of

deposit money banks in Nigeria based on the sample of banks selected

4.4 Discussion of Findings

The study agrees with the findings of Ikpafen (2013), which found that mergers and

acquisitions affect banks performance but does not affect banks’ cost of equity capital. It is

also in tanderm with the works of Okpanachi (2011), who held that the post-mergers and

acquisitions' period was more financially efficient than the pre-mergers and acquisitions

period. Other works which agrees with our findings are Joshua (2009), which discovered that

the post-merger and acquisitions period was more financially efficient than the pre-merger

and acquisitions period.

However, our result on the total deposit base shows that post merger result is not significant

compared with the pre merger period. This also agrees with the works of Appah and John

(2011) which conducted research on mergers and acquisitions in the banking industry, the

findings reveal that the consolidation merger and acquisition activities in Nigeria did not meet

the desired objectives of liquidity, capital adequacy and corporate governance which have

resulted to more troubled banks after the consolidation. Also Adetayo, Sajuyigbe and Olowe

(2013) also examined the same subject matter and found that post-merger has not

significantly impacted on banks profitability.

4.5 Summary of Chapter

In all the variables considered, the post-acquisition result has higher figures in mean,

minimum and maximum than the pre-merger figures in respect of the equity, loan and deposit

base which are proxies for the performance of deposit money banks. This shows that merger

31
and acquisition in respect of the sampled deposit money banks has positive and significant

effect on the financial performance of Deposit money banks in Nigeria.

From the t-test results above, we discover that the t-value is 1.1465 As stated in the previous

chapter, the result will be tested at 10% level of significance. The t-test result is lower than

the critical value at 10%. In line with the decision rule, we therefore reject two null

hypotheses and accept the alternatives. This means that merger and acquisition has positive

and significant effect on the financial performance of deposit money banks in Nigeria. This

finding is corroborated by the earlier results from the descriptive statistics.

32
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY

Due to the persistent distress syndrome which has crept into the banking sector since the

early 1990s, merger and acquisition seemed to have enhanced capital base for deposit money

banks in Nigeria as well as transforming them into stronger players in regional and global

banking environment. Secondary data were gathered, presented and analised. This helped us

to have first hand information on key issues regarding merger and acquisition. Considering

total equity, total loans, and the deposit base of the sampled banks as our variables, we were

interested in quantifying the extent to which variables in this reasearch are related. In this

regard, using cross tabulation to compare pre acquisition and post acquisition result, we were

able to state, to a certain specified statistical significance that the variables did and did not

have some kind of relationship. However, our result on the total deposit base shows that post

acquisition result is not significant compared with the pre acquisition period. Inaguably this

reasearch reveal that the consolidation merger and acquisition activities in Nigeria did not

meet the desired objectives of liquidity, capital adequacy and corporate governance which

have resulted to more troubled banks after the consolidation.

5.2 CONCLUSION

The study has reviewed the effectiveness of bank mergers in the conduct of sustainable

financial system. We notice that there seems to be a presumption that the reform in the

banking sector is all that is required to fix the economy. The idea underlying the merging

policy is that bank merger would reduce the insolvency risk through asset diversification. It is

equally noted that mergers require time-frame. Hence, the banks consolidation exercise of

33
2005 as supervised by the Central Bank of Nigeria has yielded basketful of benefits in terms

of improved banking environment.

This study is also in line with the study of (Ikpefan and kazeem, 2013)

5.3 RECOMMENDATIONS

Based on the findings of this study, the researcher would like to make the following

recommendations:

• Mergers have associated risks which if not well managed and implemented can

lead to failure, buyers’ underestimating of the value of assets and/or liabilities of

the target firm, and managers' inability to handle the complex task of integrating

two firms with different processes, accounting methods, operating culture, vision

and focus, these pitfalls must be avoided by all means. Pro-activism and

strategically integrated acquisition programme should be put in place because

such mistakes can be very costly.

• Organizations should not jump at any merging opportunity that offers itself

because the exercise is not an opportunistic one. It has to be well planned and well

executed to realize the very strategies objectives of venturing into the exercise in

the first instance because what makes a sound bank is really how effective and

efficient the management of the bank is deploying the available resources.

• Banks should be more aggressive in financial products marketing to increase

financial performance thereby reaping the benetit of post-merger and acquisition

exercise.

• Banks should be able to invest their funds profitably for the benefit of

shareholders and the protection of depositors.

34
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38
APPENDICES

Appendix 1

BANK NAMES AFTER 2005 CONSOLIDATION AND COMPONENT MEMBERS

NEW COMPANIES COMPONENT MEMBERS

Access Bank Plc Access Bank, Marina Int’l. Bank and Capital Bank

Int’l

Ecobank Nig. Plc Stand Alone

Fidelity Bank Fidelity Bank, FSB Int’l Bank and Manny Bank

First Bank of Nig. Plc First Bank Plc, MCB Int’l. Bank and FSB (Merchant

Bank)

First City Monument Bank Plc First city Monument Bank, coop Dev Bank, Nigeria

American Bank and Midas Int’l Bank

United Bank For Africa Plc United Bank for Africa Plc, Standard Trust Bank Plc

and Continental Bank

Union Bank Plc Union Bank of Nigeria Plc, Union Merchant Bank

ltd., Broad Bank of Nigeria Ltd, and Universal Trust

Bank

Wema Bank Plc Wema Bank Plc and National

Bank of Nigeria

Unity Bank Plc Intercity Bank Plc, First

Interstate Bank Plc, Tropical

Commercial Bank Plc, Center-

39
 Point Bank, Sociate Bank Care,

Pacify Bank and New Nigeria

Bank

First Inland Bank Plc First Atlantic Bank, Inland Bank

Nigeria Plc IMB Int’l Bank Plc

and NUB Int’l Bank

Diamond Bank Plc Diamond Bank Plc, Lion Bank

and Devcom Bank Ltd

Guarantee Trust Bank Stand Alone

Equatorial Trust Bank Plc Equatorial Trust Bank Ltd and

Devcom Bank Ltd

IBTC Chartered Bank Plc IBTC Chartered Bank Plc and

Regent Bank

Spring Bank Plc Citizen Int’l Bank, ACB Int’l

Bank Ltd, Express Bank,Onga

Bank trans. Int’l Bank and

Fountain Trust Bank

Sky Bank Plc Prudent Bank Plc, Bond Bank

Ltd, Reliance Bank, Cooperative

Bank Plc and ETB Int’l Bank Ltd

Sterling Bank Plc Trust Bank Africa Ltd, NBM

Bank Ltd, Magum Trust Bank,

NAL Bank plc and Indo-Nigeria

Bank

Oceanic Bank Int’l. Plc Oceanic Bank Int’l. Plc and Int’l.

40
 Trust Bank

Bank PHB Plc Platinum Bank limited and

Habib Nig. Bank limited

Standard Chartered Bank Stand Alone

Nigeria Int’l Bank Citibank Nigeria limited and

Nigeria International bank

Afribank Nig. Plc Afribank Plc and Afribank Int’l

(Merchant Bank)

Intercontinental Bank Plc Citizen International Bank, ACB

International Bank, Guidance

Express Bank and Omega Bank

trans

Stanbic Bank Stanbic Bank and IBTC

Chartered Bank

41
APPENDIX 2

RAW DATA FROM DEPENDENT AND INDEPENDENT VARIABLES

2016

Access Bank UBA Bank First Bank Wema Bank

N’000 N’000 N’000 N’000

Profit Before 78,230,565 90642 22,948 2,560,580

Tax

Total Asset 3,094,960,515 3,504,407 4,736,805 424,043,581

Equity 421,678,620 448,069 4,736,805 424,043,581

Loan 1,698,568,919 1,528,084 2,528,765 227,008,550

Deposit 1,908,165,060 2,594,690 3,520,299 3,520,299

2020

Access Bank UBA Bank First Bank Wema Bank

N’000 N’000 N’000 N’000

Profit Before 90,195,880 7,697 83,703 5,931,687

Tax

Total Asset 7,624,979,718 7,697,980 7,689,028 979,518,151

Equity 653,895,666 724,148 7,689,028 59,141,754

Loan 3,050,664,007 2,629,394 3,234,091 360,076,079

Deposit 5,664,376,827 6,094,168 5,933,935 804,873,392

42