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Bank Name: FCMB Bank

Account Type: Savings
Account number: 7749601025

Bank Name: Access Bank

Account Type: Current
Account number: 0107807602




          The proliferation of bank license in Nigeria since the early 1990s under the pretence that the economy was under-banked was not true because the mantra of the period proved advocates wrong macro-economic indicators had been signaling that the real sector of the economy was declining and that the economy was stagnating.

The unprecedented national growth of banks where families assembles overnight only to give birth to an unhealthy and premature banks in an economy in which almost 80% of the industrial capacity lay fallow was  uncalled for. The real sector dwindled, while mushroom banks struggle for the thin market shares. A country where more than 50 percent of the populace live below the poverty level, some people floated a number of banks with little or no capital base at the expense of the innocent banking public.

Correspondent banking is an essential service provided by banks in the facilitation of fund transfer around the globe for trade and commerce, which in the process enhance economic activities, generates employment and promote economic growth and development. To be able to perform its functions effectively and satisfactorily, banks must have the enabling capacity and requisite infrastructure. Since most banks in Africa sub-region lack this ability due to their small sizes relative to global banks and deficient banking, economic and telecommunication infrastructure, it becomes imperative to strengthen the banking industry to adequately perform its essential functions, and support the growth. of thee economy led to the banking sector, reform in Nigeria.

Efforts have been made by various stakeholders to reinvigorate the banking sector so as to improve the confidence and integrity of the banks in the country. These efforts were carried out as a form of economic on banking reforms. One of this Banking reforms, called recapitalization was initiated by the federal government to achieve consolidation, higher productive and efficiency in the banking sector.

The recapitalization exercise in the banking industry by the former central bank of Nigeria Governor, Professor Charles Soludo has necessitated the need for different organization to engage in corporate consolidation (Mergers and Acquisition) the concept of recapitalization refers to the current trend of compelling all commercial banks to raise their capital base from 2 billion naira by the Central Bank of Nigeria on or before 31st December 2005.

This has sent some of these banks on the move to consider merger and acquisition as a survival strategy since 1992, the minimum paid up capital requirement for banks in Nigeria was N12million for merchant banks and N20million for commercial banks.  These paid-up capitals lasted till 1997, when a reform of N500million for capital base was introduced. In the year 2000, the minimum paid-up capital was move to N1billion for new banks, while existing banks were expected to meet this N1billion level by December, 2002.

Then came, the year 2004 when the Olusegun Obasanjo’s government rolled out reform programmes in all sectors of the Nigeria economy. These reform programmes were aimed at restructuring the various sectors of the economy.

Since the banking industry is one of the sectors of the economy, it was not left out.

The first phase of the policy was to consolidate and strengthen the Nigeria Banking System through recapitalization with an option of merger and acquisition.

While the second phase will address the issue of diversification which will include programmes to encourage the emergence of regional and unit/specialized banks. The goal of the reform is to help you become stronger players and in a manner that will ensure longevity and hence higher returns to your share holders overtime and greater impacts on the Nigeria economy. I strongly believe that the ultimate beneficiaries of this policy shift would be the Nigerian economy, the ordinary men have stronger financial system to finance their business and the Nigerian connected and competitive banks that would also use international capital for Nigeria development. This measure is about the Nigerian people.

It is about meeting their needs, it is about positioning Nigeria and Nigerians to become competitive players in the 21st Century.


The recapitalization of capital base of banks will go a long way to strengthen the capital base of various banks but is associated problems cannot be over-emphasized. With this understanding, the statement of problem therefore arises from the following question:

  • Has the banking sector able to provide cheap and accessible fund to all business enterprises.
  • To what extent has recapitalization effect interest rate in the banking sector?
  • How far has the recapitalization process strengthen the integrity of the banking process?
  • To what extent have the users of loans been able to access desired loan.


          The Nigeria banking industry is bound to experience remarkable changes is the current recapitalization/consolidation exercise. Though the first phase of the consolidation exercise is over, a lot of issue, challenges and prospects awaits the banking industry.

In this work, the researcher decides to look into how the bank succeeded in the consolidation/recapitalization in the first phase, the banks that merger or acquired. Other issues to look into are how the bank will survive in this new competitive environment, impact on the other sector, reforms on investment e.t.c.

Another objective of this research work is on the part of the global change and challenges which are strong, competitive and reliable. There have been some successful marriage between some banks and outright takeover, there is no much challenges in the area of cultural differences, but those that merge were faced with some problems.

The Nigeria banking system has undergone remarkable changes over the years in terms of the members of institutions, ownership structure, as well as depth and breadth of operations, technological innovations and adoptions of supervising and prudential requirement that conform to international standard. And lastly the effect of the recapitalization, commercial lending rate/interest rate is another objective of this study.




The researcher’s point is to emphasize and to relate the recapitalization trend in the banking industry, to its impacts on bank interest rate by regressing interest rate against the level of capital base liquidity ration money supply and large money supply.

Ho: There is no relationship between liquidity from recapitalization and interest rate.

Hi: There is a relationship between liquidity from recapitalization and interest.


The research work trend to cover mainly the recapitalization in the banking system via merger and acquisition and its effects on interest rate. Other future hold for the banking sector and how to manage the challenges that they will face after the first phase of the reform agenda of the apex bank. The research work will also look into how the bank merged those that were mergers acquired and taken over the research work will also look at the effect of the recapitalization and those that stand to lose as a result of the exercise.


Thus research should cover banking sector in Nigeria. It should also cover the role of CBN in the banking sector, the research should capture the activities and process of recapitalization as it effects the banking sector especially the interest rate.

The study made use of the census mode, hence the sample size is made up of the entire population which comprises of all quoted banks in Nigeria from 1991-2008.



In this research, particular attention will be paid to the immerse utilization of data from secondary sources. This implies that data will be obtained from textbooks, journals, conference papers, internet sources, government publications, magazines, financial papers, federal offices of statistics (FOS), Central Bank of Nigeria (CBN). The data will be analyzed using Ordinary Least Square regression method.

This will enable us to test the hypothesis and give the necessary interpretation and finally research a conclusion base on the regression analysis.


It is important to note that the bureaucracy inherited from the colonial master has found its way to operational set up of our banking system.

This has denied the released of some vital information or data needed for this research work.

Another limitation is the inability of some managers of some banks to speak openly on the issue of recapitalization, time limitation is inherent in any organized effort such as this work. Also, a lot of constraint was experience in getting all the needed information from the source documents.


(i) Recapitalization: This is the result of an injection of capital into a company either through raising the level of the current debt of equity.

(ii) Merger: This can be defined as the combination of two or more separate business into a single business.

(iii) Acquisition: This is a situation where business takes over the controlling shareholding interest of another company at the end of which the two can come together as one entity or still exist as separate entities.

(iv) Interest Rate: This is the extract money that you pay back when you borrow money or that you receive when you invest money.

(v) Liquidity: This is the state of owning things of value that can easily be exchange for cash.