MERGERS AND ACQUISITIONS AS IMPETUS FOR ACHIEVING CUSTOMER-DRIVEN DEVELOPMENT OF THE BANKING SECTOR IN NIGERIA

Abstract

The aim of this research is to assess the effectiveness of mergers and acquisitions in the drive towards creating a Nigerian banking industry that is customer-focused. The research was carried out using a sample of one hundred and twenty (120) respondents comprising of customers of four banks namely: UBA Plc, Skye Bank Plc, GTBank Plc and Zenith Bank Plc. The four banks consist of two that were merged or acquired and two that were able to raise their capital base without mergers and acquisition. A structured questionnaire was administered on the respondents to elicit information on their perception of the performance of the banking industry after it was restructured in 2005.The analyses show that with an overall mean value of 2.89 for banks that merged or acquired, and 3.12 for banks that did not undergo mergers and acquisition, customers of banks that did not merge appear more satisfied than those of the merged banks. They also show that the mean scores for questions regarding interest on loans and advances are higher than 3. These means suggest that customers somewhat agree that improved capitalization has indeed reduced interest on loans and advances. We conclude therefore that the directives given to the banks by CBN to merge or be acquired in order to increase their capital base may have been rightly given as there is indeed an improvement in banking practices as shown by customers’ satisfaction and accessibility to loans and advances. Also, the indirect merger justification of increasing market power has been significantly achieved. Through the mergers and acquisitions, the merged or new banking institutions were better able to compete with similar institutions within their markets both locally and internationally (particularly at the African regional level), and have increased their product sales, and, thus, their gross revenue.