Mergers and Acquisitions and Banks Performance in Nigeria

Abstract

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 in 2004, which saw most of the then existing 89 banks merging with each other. This paper evaluates the impact of mergers and acquisitions on performance of Banks in Nigeria. To do this, pre-merger and post merger financial statements of two consolidated banks were obtained, adjusted, carefully analyzed and compared. The result revealed that all the two groups produced in addition to operational and relational synergy, financial gains far more than the 2+2=5 synergistic effects. Ratio technique and inferential statistical tools were used to highlight synergistic effects on the merging banks.

Keywords: Consolidation, merger, acquisition, synergy, shareholders