The Impact Of The CBN Banking Reform Police On Nigerian Economy (A Case Study Of Uba Plc)

Project and Seminar material for Accountancy

Project and Seminar material for Accountancy


Abstract


This work centered on the impact of the CBN banking reform policies on Nigeria Economy. The following was carried out under setting steps. To identified the may or CBN banking reform polices on Nigeria Economy. The banking sector to play its roles has been periodically punctuated by its vulnerability to systematic distress fume turning invitablimenty

This paper is armed at reviewing the impact of CBN banking reform polices in particular, the complementary polices and out comes of the recent reform such reform as it relates to law and regulatory and supervisor aspect of the central bank of Nigeria control of financial systems.


Chapter One


1.0 Introduction

The baking industry in Nigeria has undergone remarkable changes in recent decades given the increasing wave of globalization, structural and technology changes and integration of financial markets.

The banking sectors ability to play roles to systematic distress and macroeconomic volatility, making policy fine-tuning inevitable. The banking reforms were focused on liberalization of banking business ensuring competition and safety of the system, and proactively positioning the industry to perform role in economic development.

This paper is amined at reviewing the impact of the CBN banking reform polices. In particular the complementary polices and cart comes of the recent reform such reform as it relates to law regulatory and supervisory aspects of the central bank of Nigeria control of financial system.


1.1 Background Of The Study

In august 5th 2004 after the CBN governor’s advises to the banker committee can July 6th 2004 at the CBN headquarter in Abuja on the Nigerian banking sector reform and subsequent interactions with various stale holder the then CBN Governor, professor Chukwuma Soludo approved guideline and incentives to facilitate consolidation in this industry and stock market in order to asset bank in meeting the approved capital base by December 31st , 2005.

This director that bank recapitalization passed both threats and opportunities because many banks will not be able to meet the new capital requirement. Some banks began to make known their lans to consolidate such consolidation would head to mergers and acquisitions or combination of both recommended by the central bank of Nigeria CBN. In addition to raising capital in the stock market via right issues private placements , public offer intake of strategic foreign core investor among others.

Consolidation arrangements as announced by the CBN Governor involving bank at the signing of memorandum of understanding (mon) on various ceremonies/occasion lied to the north of five(5) “mega” banks. At the expiration of the deadlines on 31st December 2005, twenty five(25) groups Emerge from seventy five (75) banks cert of the eighty nine (89) banks that existed at the end of December 2004. the successful banks accounted for 93.5% of the total deposited liabilities of the banking system. Fourteen banks which neither met the minimum capital base of 250 billion nor found merger partners has their license revoked by the CBN.

Consequently, the Nigerian deposit insurance corporation (NDIC) was directed to obtain court approval to commence the process of liquidation of the attested banks. The component members of the twenty five(25) consolidated banks were as follows Access bank plc, Afribank Plc, Diamond bank plc, Eco bank plc, Equatorial trust bank plc, (ETB) fidelity bank plc, First bank plc Nig plc, First city monument bank (FCMB) plc, first inland bank plc, (now branded fin bank plc, IBTC Chartered bank plc) (now stannic IBTC) intercontinental bank plc, NIB, Oceanic international bank plc, platinum, Habib bank plc (branded bank PHB) Skye bank plc, spring bank plc spring bank plc, stanblic bank ltd standard chartered bank ltd, sterling bank plc, united bank for Africa (UBA) plc, unity bank plc, wema bank plc, union bank plc, and zenith international bank plc.

Some banks were quoted in the Nigeria stock market to expand their business and to get assistance to fund their project.

The frame work for monetary police management in 2007 remained that of monitory targeting. The central bank of Nigeria (CBN) adopted various policy measure aimed at containing the growth of monetary aggregates in order to achieve monetary and price stability. Open market operations (omo) remained the major tool of liquidity management. other policy measures included increased issuance of treasury securities the primary market to mop up excess liquidity use of deposit and lending facility to encourage inter bank transaction as well as special sales of foreign exchange including swap arrangements.

NTBS of various tenors (91-182 and 364 were auctioned during the period.

The liquidity management efforts of the CBN yielded the expected result as the sigh digit inflation rate was sustained during the year.

In addition, the exit reserve money target under the policy support instrument (ps) was achieved in June 2007 cover the end December 2006 level provisional data indicate that broad money supply (m2)grow by 11.03 percent in June 2001 and further by 21.3 and October 2007.


1.2 Statement Of Problem

There the statement of the problem is trying to cover the problems facing banking industry in Nigeria that necessitated its consolidation and why the cbn governor pronounced recapitalization and creating possible solution to the problem.

  1. Grass undercapitalization in relation to the level of the operation.
  2. High level of classified loans and advances
  3. Illiquidity reflected in the inability to meet customer cash with drawls.
  4. Low earning, resulting from large cooperation losses.
  5. Wealth management, reflected in poor credit quality inadequate in turned control, high rate of funds and forgeries.

The solution is that bank have to be quoted in Nigeria stock exchange (NSE) to expand their business and get assistance to fund their projects.


1.3 Objective Of The Study

The objective of this research work include :-

  1. To ascertain the extent to which the current banking reform exercise will lead to the satisfactory or maximum profit to the banking industry in Nigeria.
  2. To ascertain if the merger’s and acquisitions at banks in the country will in any way affect the growth and development of stock market in the Nigerian economy.
  3. To ascertain if the banking reform will bring about greater diversification services affered and in market areas served.
  4. To examine the extent to which the current reform will bring about greater efficiency and productively in the use of resources.
  5. To ascertain if the current consolidation will bring about increased growth rate in assets ales funds sources or credit account.

1.4 Research Question

This contain questions in a printed form that is directed towards a selected group of people which are called respondents and which when answered will provide useful information that will guide a research repost.

The question were both open ended, close ended question while some other questions were constructed to be answered by the respondents with comments.

The open ended question were designed to given question. The close ended questions were designed to give the respondents a choice answers for which they are reqred to choose.


1.5 Statement Of Hypothesis

  1. Ho: The CBN banking reform policies will not head to satisfactory a maximum profitability to the banking sector.
    H1: The CBN banking reform polices will head to satisfactory or maximum profitability to the banking sector.
  2. Ho: the banking reform police will not make the Nigerian banking industry give better service to the community.
    H1: The banking reform will not make the Nigerian banking industry give better service to the community.
  3. H0: The current consolidation of bank will not lead to minimization of risk exposure to the institutions net earning asset quality and long run viability.
    H1: The current consolidation of bank will head to minimization of risk exposure to the mititutions net earning asset quality and long run viability

1.6 Significance Of The Study

This research will be useful to the rending public an way’s by which the banking consolidation has helped in transforming the banking industry in Nigeria.

To corporate government economist policy makes all parties to this consolidation. They will be involved in provision to corporate and investment issue.

All banker try vigorously to reach cent to their customers for depot mobilization. Thy offer different enticing gift incentives especially to corporate customers.


1.7 Scope Of The Study

This research works is aimed at ascertaining the impact of the CBN’s banking reform polices on the Nigeria economy. To determine whether the banking reforms have improved the productivity of bank. The study concentration united bank of Africa (UIBA PLC)


1.8 Limitation Of Study

The following problems were faced in carrying out this research work:

Time:

Due to time constraint much analysis and information could not be obtained.

Finance:

During to financial constraint this work was unable to cover a large sample in the study.


1.9 Definition Of Terms

Some terms or words which were used are peculiar to this area of study are defined.

CBN:

Is a bank that Nigerian government sets up to help handle its truncation to coordinate and control the commercial bank most especially and most importantly to help control the nations money supply and credit conditions.

Bank:

A financial institution whose man activities are borrowing and lending money bank borrow by accepting deposits from the general public other financial institution and in term advances loans by creating credit (John black 2002)

Banking:

The provision of payment facilities credit and capital to individuals firms and the government (JOHN black 2003)

Consolidation:

Means coming together of some banks within the country to come one bank.


Chapter Five


5.0 Summary, Conclusion And Recommendation

5.1 Introduction

Based on the research carried all relevant data analyzed and all hypothesis formulated dully tested, the following would be appropriate.


5.2 Summary Of Findings

  1. The CBN’s banking reform policies will lead to satisfactory or maximum profit to the banking industry in Nigeria.
  2. Mergers and acquisition of banks have contributed to the growth and development of the banks since after consolidation exercise in the banking industry.
  3. The banks are now more efficient rendering services to her customers.
  4. The banking sector is now playing a catalytic role in economic development.
  5. The banks have been able to tackle the problem of low earning resulting form target operation losses.
  6. The banks have been able to meet up with the customer’s cash withdraws.
  7. The banks are now able to reduce or minimize risk exposure to the institutions net earnings

5.3 Conclusion

Based on the summary of finings in this research work, it could be deduced that banks have bright prospect for the future. If all issues recommendation implemented, then the sky will be the limit for the bank in playing their role of intermediation in Nigerian economy, reaming the life wire to businesses activities in the country and also the droving force of the economy.

Finally, the bank should ensure that their operations are transparent to encourage investors to have confidence in the institution and for the depositor to have a peaceful rest that their money is safe.


5.4 recommendation

In order to ensure that the banking reform polices of the CBN have impact on the Nigerian economy, a change will have to be made to reflect the following.

  1. The banks should be properly and adequately equipped as to able to apply its intermediation role in Nigeria economy.
  2. There should be annual training of bank executives so that they will know what is priority of the economy and to find ways to achieve it.
  3. Adequate machinery should be put in place to checkmate the activities of the banks. Example EFCC

The Impact Of The CBN Banking Reform Police On Nigerian Economy (A Case Study Of Uba Plc)


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