TABLE OF CONTENTS
Chapter One: Introduction
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Purpose of Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Significance of the Study
1.7 Scope of Delimitation
1.8 Definition of Terms
Chapter Two: Literature Review
2.1 Meaning of Merger and Acquisition
2.2 Types of Merger and Acquisition
2.3 Legal framework
2.4 Mergers and Acquisition the challenges
2.5 Human Resources in the Nigerian Banking Industry
2.6 Challenges induce by banks Consolidation to Nigerian Deposit
2.7 Future Plans
2.8 Portfolio Analysis and Its Implication for Strategic Planning In
Mergers and Acquisition
Chapter Three: Research Methodology
3.1 Research Design
3.2 Area of Study
3.3 Population of Study
3.4 Sample and Sampling Techniques
3.5 Instrument for Data Collection
3.6 Method of Data Analysis
Chapter Four: Data Analysis, Interpretation and Presentation
4.2 Bio- Data of Respondents
4.3 Response to the Problem Area
4.4 Test of Hypothesis
Chapter Five: Summary, Conclusion and Recommendation
5.3 Implication of Finding
5.5 Limitation of the Study
1.1 BACKGROUND TO THE STUDY
A review of developments in the Nigerian
banking and financed system indicates that the banking sector has
undergone remarkable changes over the years, in terms of the number of
institutions, ownership structure, as well as the scale of operations
driven largely by the consolidation of the financial sector in line with
the global trend. As at the end of March 2004, insured banks stood at
89 with various sizes and degrees of soundness. The Central Bank of
Nigeria (CBN) rating of all the banks classified 62 banks as
sound/satisfactory of the banks did not render any returns during this
period. The sector generally enjoyed a stable operating environment
until July 6th 2004, when the announcement of the CBN which introduced a
major policy initiative effective the sector.
The foregoing not withstanding, the
market share based on the industries total asset distribution, shows
that the sector was highly concentrated with the top ten banks
accounting for more than 50% percent of the total asset. Many of the 89
banks are small in size and unable to effectively compete with the
bigger ones. Many of the small banks are closely held and are played by
various problem and constraint which includes: Low capital base, weak
corporate governance as manifested in meddlesome interference in
management function, poor risk management, unethical and unprofessional
practice, Mal-adaption of the banking industry as bank were not
addressing the core needs of the environment low confidence in the
Nigerian banking system, unethical competition leading to some banks
covertly de-marketing the competitors, late or non- publication of
annual account that obviates the impact of market discipline in ensuring
banking soundness, over-dependence on public sector deposits, neglect
of some and medium scale enterprises by the system, insolvency as
evidence by negative capital adequacy ratio and shareholders funds that
had completely eroded by operating loss, over-trading, high incidence of
non-performing loans, weak management, inaccurate report and
noncompliance with regulatory requirements, gross insider abuse,
credits, neglect of small and medium class savers, ethnic misconduct,
falsification use, returns by the banks to the central bank,
unprofessional use of female staff in some banks in the name of
"Marketing", high lending rate. From the foregoing analysis, the
Nigerian banking system faces enormous challenge which if not addressed
urgently could snowbell into a crisis in the near future. In view of the
identified problem of the Nigerian banks, the Central Bank of Nigeria
(CBN) which serves as government agency and the government as the
custodian of the masses. Discovered the unethical behavioural
disposition of Nigerian banking industries, from time past, the
regulatory and supervisory authorities had found it difficult in trying
to get bank to always comply with regulatory guidelines. Some banks were
even suspected to be investing huge resources in exploiting every
available loophole in the regulatory guidelines. That bank which
religiously towed the path of honour appeared to be fighting a loosing
battle. It seems to be a case of "if you could not beat them, you join
them", there is a need to take an imperative step to eradicate the
draconian situation in the banking industry. This, however, led to the
decision made by the CBN through it governor, on the 6th of July, 2004,
at the special meeting of the bankers committee, the governor, Professor
Charles Chukwuna Soludo rolls out new capital base among other things
which finalized at N25 billion at minimum capital base with full
compliance before the end of December 2005. this led some of the bank to
the banks to go into Initial Public Offer (IPO), Private Placement etc.
with the minimum capitalization of N25 billion banks are continually
flooding the capital market to raise additional capital funds either to
meet up with the minimum requirement or to position themselves for
Merger and Acquisition which is currently taking place within the
banking industry in Nigeria, are here to stay and should change the face
of the banking sector beyond recognition. The consolidation deadline on
31St December, 2005 ultimately became a reality.
Before then, doubting " thomases" were
still believing that, it could be extended. They were caught unaware, on
the other hand, very serious institution believed from the on set that
the level of capitalization required was apparently a Herculean task. It
was achievable and hence, they stared working towards the realization
of the set target. The deadline did not catch such institution napping.
In fact, a few of the 89 bank which were already capitalized up to or
even beyond the required benchment of N25 billion did not choose to rest
on their oars but out to further strengthen themselves through
acquisition (bought over) of smaller banks, injection of flesh via the
capital market etc. while others were consummated i.e. Merger, those
banks which couldn't scale through the hurdles went into extinction.
They were handed over to the NDIC (Deposit Insurance Corporation).
Furthermore, the issue of consolidation
of banks is an integral part of NEEDS i.e. National Economic Empowerment
Development and Strategy. Introduced by the last regime. It should be
noted that Merger and Acquisition apex regulatory body is (SEC) i.e.
Security and Exchange Commission. This authority sees to the
conditionality for merger and acquisition of firms/companies in Nigeria.
However, there is a needs to thoroughly
study the requirement for mergers and acquisition. The efficacy of this
study is to exams the challenges of mergers and acquisition to human
resources management in the Nigerian banking industry.
1.2 STATEMENT OF THE PROBLEM
The banking industry in Nigeria went
through structural changes which has pose a challenges to employee
behaviour. The implementation of the policy have induced a shake-out in
the industry, which has infused a new set of challenges to human
resources in the banking sector. Some of which include: Delayering,
outsourcing, job-cutting, from junior to senior staff, downsizing,
rightsizing, precipitate retirement, reduced morale and loss of
bargaining power, contravening work schedule, reduction in rank of staff
i.e. from the chief executive officer to the managing director.
This has created room for apathy and
disparity. Also the emerging bank came across the problem of different
orientation and inactive of merging workers to dealt with and
remuneration package disparity that need to be integrated into the
direction of new banks. It should be noted that the difference that are
occurring should not be neglected, that if over look could to crisis in
the industry. This will make the essence of merger and acquisition to be
a wasted effort.
After merger and acquisition, the major
casualties are always the human behavioural work pattern which has a
resultant effect on individual and groups at work place. This is because
staffs of the effected banks will be jittery about job security, which
invariantly affect their productivity. This include:
1. The issues of job losses from top executive to junior staff.
2. Job security
3. The need for re-orientation of the new staff
4. How effective and efficient merger and acquisition
5. Job design and non- unionization in the banking sector 6. Casualization among junior staffs.
1.3 PURPOSE OF STUDY
The aim of this study is to scrutinize
the challenges for employee behaviour in the emerging mergers and
acquisitions of banking sector. It also has the aim of:
1. To examine how effective on individual performance.
2. To suggest, how mergers and acquisitions of these banks can be integrated to organization set goals.
3. To examine how mergers ands acquisition affect group performance.
4. The effect of mergers and acquisitions on the profitability and survival of a bank.
5. To examine the effect of technology on human resources.
1.4 RESEARCH QUESTION
Research question is regarded as the
main instrument in survey research. In this regard the main questions
for this study are as follows:
- Does the application of merger and acquisition in the sector brought higher earning and stability?
- Does the merger and acquisition strategies brings about effectiveness and efficiency realized after consolidation?
- Does merger an acquisition results in high employees performance? 9. Does emerging Mega- banks have structured changes?
- Does merger affect employee job position?
- Does liquidity of distress bank bring about negative influence in the banking industry?
1.5 RESEARCH HYPOTHESIS
The following are the possible research hypothesis to be tested:
H0: Merger and Acquisition does not affect the competencies of human resources (employees)
H1: Mergers and Acquisitions do affect the competence of human resources (employees)
H0: There are no direct by off jobs in Mergers and Acquisitions.
H1: There are direct lay-off job in Mergers and Acquisitions.
1.6 SIGNIFICANCE OF THE STUDY
The implication or challenges to
employee behaviour in merging and acquired banks has become very
pronounced with the emergence of mega-banks, because one reason for
merger is the need for banks to foster expansion and achieve growth and
greater profit which would otherwise be hard and be almost impossible to
attain as separate entities or would take more resources and longer
time to accomplish of each entity goes on separative ways.
Banks have the challenges of subjecting
their staffs to necessary training and skills development for them to
cope with the demand of current trend of activities in today's banks.
(Tina Weber, ECOTEL RESEARCH INSTITUTE) that involves:
- High productivity and standardization.
- Increased in capital base
- Eradication of lack of transparency
The quality of the workforce just has to
improved, the study will generate relevant data on which solution to
problem of merger and acquisition as it affect human resources
1.7 SCOPE OF DELIMITATION
The study will be carried out on the
some staffs in some organizations which includes top managers, middle
managers and junior staffs, However, the delimitation of the study will
be financial constraint, time constraint, and the objectiveness of on
the part of the respondent in retrieving information.
1.8 DEFINITION OF TERMS
Mergers: According to
the companies and allied matters degree (1990) section 590 define
mergers as "Any amalgamation of the undertaking or any part of the
undertaking or interest of two or more companies or the undertakings or
part of the undertakings of one or more companies and one or more bodies
to G. Omotayo Gbede (2005) defines acquisition " as the buying over of a
company by the payment of cash to its shareholders by another company
with the target company still continuing its existence but as a
subsidiary of the buying company which becomes the acquired company's
Challenges: These are
conditionality or factors that aid in bringing out the potentials to
tackle difficulties or problem in an environment.
Delayering: Is the
cutting down of the layer or levels of authority between the lower level
employees and the highest ranked employee. Downsizing: is the
reasonable reduction in the size of activity engaged in the firm and
consequently cutting in the size of employees employed by the company.
Outsourcing: Is the act
of sub-contracting less relevant aspect of the business organization to
other organization and focusing on the core business of the firm.
Employees Behaviour: Is
the effective and efficient acquisition, retention and utilization of
the people or human resource at work towards satisfying the workforce
and the attainment of the organizational objectives.