Banks Consolidations in Nigeria - A Synergistic Harvest
Journal of Management and Enterprise Development, Forthcoming
16 Pages Posted: 13 Aug 2007
In order to strengthen the competitive and operational capabilities of banks in Nigeria with a view towards returning global and public confidence to the Nigerian banking sector and the economy in general, the Central Bank of Nigeria instituted a banking reform which saw most of the then existing 89 banks merging with each other. It was earlier speculated in some financial analysis quarters that the exercise might turn out to be one of those overblown hypes of an ailing economy. This, however, has turned out to be the opposite as most post-merger results tend to highlight that financial synergies exist. This paper tries to evaluate the authenticity of this assertion. To do this, pre-merger and post merger financial statements of 4 consolidated banks were obtained, adjusted, carefully analyzed and compared. The result revealed that all the four merger groups produced in addition to operational and relational synergy, financial gains far more than the 2 2=5 synergistic effects. The validating two-way ANOVA test also revealed that variations in shareholders funds can significantly affect the value of total assets of a bank.
Keywords: Consolidation, Merger, Acquisition, Synergy, Shareholders Funds, Total Assets, Growth Rate
JEL Classification: C43, G21, G34, L12, M21
Suggested Citation: Suggested Citation