Customers of banks expect their
bankers to provide them with loans and advances to makeup any short fall in
their funds requirement for transactional motive.
This project is sub-divided into
five chapters, which focuses on Risk Management in Nigeria Banking Institution.
Questionnaire were distributed to
collect the relevant information from the respondent, percentage and chi-square
analysis were used and the hypothesis testing was carried out, it was found
that there is risk in bank which enable me to conclude that there is risk in
bank lending and because the rules of lending are not often followed when
granting credit facilities to their customers.
1.1 BACKGROUND OF THE STUDY
The purpose of this project is to highlight the
instability, uncertainty, inaccurate planning and budgeting process and loss of
effective control management function in the financial institutions, occasioned
by the dynamic macro economic variable in Nigeria within the last decade.
The economic variables were introduced apparently
to achieve or obtain a level of economics sanity in the country, under
different names like structural adjustment programme, exchange control
deregulation and price control.
Consequently, the management of policy issues in
financial institution has become not only volatile but unpredictably difficult.
It has become toughly risky for those institutions to carry on their normal
The banking industries are susceptible to all
forms of risk. It has an ageing long history in the overall operation of all
Risk is a commonly used word. The Oxford learning
dictionary, defines risk as the possibility of meeting danger or suffering harm
or loss. All human and corporate under taking have certain element of risk to
avert risk, forward looking in management must show sufficient interest in the
management and control of these Operations in the bank and monitor the possible
impact these may have on the banking performance. This study attempts to
emphasize this point in bank management.
1.2 STATEMENT OF RESEARCH PROBLEMS
Research work is carried out to investigate into
some areas that need more attention, which has not been focused or where there
has been work or ideals put forward in the areas. To this end, this work
attempts to find out a certain problems that affect the bank and try to suggest
solution in areas of pitfalls some of these problems included the followings:
Does the bank
actually carry out critical assignment before advancing credit?
Does the bank
lack competent handling the sensitive areas of risk control of the bank?
effectively utilize the fund borrowed to endure return which consequently lead
measures of loans recovering by the bank effective?
intimacy of some loans seekers with the authorities of the bank inhabit proper
and many more are worth assessing in order to being a position to endurance a
more realistic measure, which when followed will bring about positive change in
the banking industry.
1.3 OBJECTIVES OF THE STUDY
Based on the background information, this study,
therefore aims at examining and actually finding out how the banking industry
in Nigeria has been faring in management, managing risk in the bank.
The purpose of this research is to seek
recondition with their risk elements through the polices, as no bank can be in
operation without risk, there is a need to take such, risk as would be
compatible with profitability, liquidity and prudence. Realizing the
profitability are inversely related, it is the good management of risk that
will achieved a locus of feasible point exchange or the banks.
1.4 SCOPE OF STUDY
This work is restricted to the bank under the study,
Union Bank of Nigeria Plc and no attempt was made to compare finding with what
is obtainable in other banks within the same sections, although reference could
be made in this regard when needed.
1.5 SIGNIFICANT OF STUDY
The significant of this research work includes
among others, the gains that accrue to the research, the bank and invariable to
other interested parties. Effectives management of risk in banks had been
The work will enable the banks to know whether
there is risk when giving out credit to customers and whether the risk on
existing credit management system is in the line with the recommended credit
policy laid down by the central bank of Nigeria and not the necessary in the
The result from this study shows that the research
frequently hope would provide the policy makers, head of organization most
especially the board of director of Union bank of Nigeria plc, a background of
this information for proper risk management system in the bank.
1.6 STATEMENT OF RESEARCH HYPOTHESIS
Hypothesis could be defined as a statement of
association which are yet to undergo verification order to prove their validity
or otherwise such as preposition of this work included:
1 Ho: Some customers have the problems of
inadequate collateral securities of the loan requested for.
2. Ho: There is a risk in bank leading,
because the rules of lending are not often granted when granting credit
abilities of customers
Hi: Some customers do not have the problem of
inadequate collateral securities or the loan requested for.
3 Ho: Counter –order from superior officers
does not influence the lending decision of lending officers.
1.7 LIMITATION OF STUDY
The factors that limit the scope of this work can be
categorized into two variables, which is a controlled and uncontrolled
variable. The formal is based on the time with researcher disposals to carry
out the study and financial constraint, while the latter is attributed of the
established under study some staffs treat questionnaires administered with
competent and resentment which at the number of questionnaire that retired,
while some initial information that would have been added to the substance of
the work was not given as it was claimed to be management decision and they
view such facilities.
CORPORATE PROFILE OF UNION BANK
The evaluation of the union bank in Nigeria cannot
distinguish from growth in international trade. Before the advert of European,
Nigeria and other west Asia countries had trade link with the worth and East
via the Sahara trade routes.
In 1917, the colonial Bank which started operation
in African in the year 1836, opened branch in Lagos, Zaire and Accra, however
in 1925 the colonial bank limited merged with Anglo-Egyptians banks and the
national bank of south Africa to form the Barclays bank D.C.O. Dominion
colonial and overseas.
This was an era when individual could float banks
that will subject only to the provisions of the section 2 (1) of the companies
ordinances, availability of adequate bank capital, windows banking was common
feature since banks poferated at such supervision rate that era could also be
described as a rudimentary banking in Nigeria.
Prior to 1973, the foreigners were the majority
shareholders in Barclay’s banks of Nigeria. Thanks to Nigeria indegenisation
decree of 1973, which no longer allow the establishment of foreign banks with a
majority of foreign interest. In compliance with this decrees the shareholder,
Nigeria owing 28.3% in the year 1997, the Barclays Banking of Nigeria limited,
change its name to Union bank of Nigeria with Barclays bank giving up 22%
Union bank in may 1989, the bank became 100% Nigeria
owned and managed making it the first of the kind among the three biggest banking
systems in Nigeria, section 29 (2) of the companies and allied matter, decree
CAMB 1990, mandated all the public companies in Nigeria limited by shares to
end their name with the worlds public limited company in compliance with this
section and its subsection of this decrees the bank charged from limited to Plc
after it name now bears the union bank of Nigeria plc.
In 1994, at the annual general meeting member
approved by a special resolution to increase the share capital of the bank to
N250 million as new capitals. Union bank
of Nigeria plc annual report and account core capital consist 1 paid up capital
statutory and other researcher is now very lose to the N1 billion banking history and it confirms the bank story position
as the highest enterprises wholly owned and managed by Nigerian among the
companies quoted on the Nigeria stock exchange with over 75years of banking
services to the nation. The bank assets based has risen to N
The bank is the first bank of Nigeria to achieve the
N 4.5billion deposit account. The bank
has 400 branches nationwide and will filed overseas branches in London. The
bank also has over 12,000 staff strength.
DEFINITIONS OF TERMS
MANAGEMENT:- This can
be defined as the variability that is likely to occur in the feature returns of
Management, This is defined as the process of directing,
co-ordination and influencing the operations of an organization so as to obtain
desired result and enhance a total performance.
RISK:- A business
organization that requite and hold deposit of funds from others, make loans or
extends credit and transfer fund by written order or depositor. The terms
occasionally but accurately applied to commercial banks only because of the
peculiar types of services that commercial performs, they maintain and create
demand deposited (checking account which are part of the nation money supply) a
place of business or keeping or lending exchanging and issuing money.
These are financial institutions, which accept deposit and other loans to the
FACULTY:- A bank
faculty is any credit services rendered by a bank. It is distinct from bank
services. Bank services included all such function performed by the banks or
example opening a saving account, cashing cheque, opening a letter credit
foreign remittance e.t.c. Bank facilities is a concession given to trusted
customer at times on the pledging of available credit, credit facilities are
not mutually exclusives.
transaction between two parties in which one (creditor or lender) supplier
money, goods, securities in returns for a promised future, payment by the other
of debtor borrower. To sell or lend in the basis of future payment.
MONEY:- This can be
defined as anything which passes freely from hand to hand and is generally
acceptable in settlement of debt.
property pledge as a guarantee of payment or an obligation or loan.