This study examines the current banking sector reforms and repositioning through recapitalization for competitive advantage with a particular reference to United Bank for Africa. The study further discovered that the fragile banking system in Nigeria create a number of problems in the country. This includes lost of depositor’s money, loss of jobs, loss of confidence in the banking system, major financial crises resulting in failure and distress banking syndrome, and inability of the banks to contribute in any significant ways to national development. Finally, the study discovers that in order for United Bank for Africa to strategically reposition itself fro competitive advantage in the post recapitalization era. More emphasis are needed in areas of marketing, information technology, customer services quality of personnel and technology.


Title page - - - - - - - - - i

Declaration - - - - - - - - ii

Approval page - - - - - - - - iii

Dedication - - - - - - - - - iv

Acknowledgment - - - - - - - v

Abstract - - - - - - - - - vii

Table of Contents - - - - - - - viii



1.0 Background of the Study - - - - - 1

1.1 Statement of the Problem - - - - - 4

1.2 Objective of the Study - - - - - - 6

1.3 Research Questions - - - - - - 6

1.4 Significance of the Study - - - - - 7

1.5 Scope of the Study - - - - - - 9

1.6 Limitation of the Study - - - - - 9

1.7 Definition of Terms - - - - - - 10



2.1 Introduction - - - - - - - 12

2.2 The Concept of Recapitalization - - - - 13

2.3 Recapitalization in Developed Countries - - 16

2.5 Trend of Recapitalization in Nigerian Banks - - 26

2.6 Recapitalization and Banks Performance - - 9



3.1 Introduction - - - - - - - 34

3.1 Area of the Study - - - - - - 35

3.2 Research Design - - - - - - 35

3.3 Population of the Study - - - - - 35

3.4 Sample Size and Sampling Finding - - - 36

3.5 Data Collection Instrument - - - - 36

3.6 Administration of Instrument - - - - 36

3.7 Method used in Analysis of this Study - - - 37



4.1 Introduction - - - - - - - 38

4.2 Customers Questionnaire - - - - - 50



5.0 Introduction - - - - - - - 57

5.1 Summary of Findings - - - - - - 57

5.2 Conclusion - - - - - - - - 60

5.3 Recommendations - - - - - - 62

Reference - - - - - - - - 65



1.0 Background of the Study

The Nigerian banking industry has witnessed tremendous changes and expansion since the mid 1980s. Unfortunately the growth and expansion in the sector are not the manifestation of a sound or vibrant banking system known anywhere in the world. Most banks in Nigeria are characterized by inadequate capital base, poor services, hug rate of bankruptcy, lack of management expertise, bad debt syndrome and greater exposure to fraud. In addition, many have poor database and lack of reliable information on which sound policy decision can be take by Board of Directors. This is a fragile banking system which is waiting to explode from the contagion effect of the liquidation of over eleven banks which are technically considered distressed. Currently there are 89 banks in operation in Nigeria, with 79 being considered marginal or fringe players and with over 1,036 – fraud case in banks in 2003 while N9.3 billion was lost through fraudulent activities.

A poor banking system of this nature creates unquantifiable problems and crisis in the economy which could result in thousands of people losing their jobs, lost of depositors’ money, lost of confidence in the banking system and above all the banks can have little contribution to the economic development of the country. Essentially, the objectives of the new, banking sector reform though recapitalization of N25 billion for each bank intends among other things to take proactive steps to prevent an imminent systematic crisis and collapse of the banking industry, create a sound banking system that depositors can trust, create banks that investors can rely upon to finance investment in the economy to drive down the cost structure of banks and make them more competitive and development oriented and to ensure Nigeria meets minimum requirements for regional financial system integration, effectively, positioned to be a key. African regional and global player.

Taking this steps is imperative for the survival of the fragile banking system in Nigeria and to be at per with the global trend. Generally speaking, the current average capitalization of banks in Nigeria is less than $10 million or N1.3 billion and with the largest bank in Nigeria having $298 million compared with the smallest Malaysian bank with $526 million. This is an important indices for an understanding of the unique, nature of the Nigeria banking system among developing economies. 

In the study an attempt has been made by examining the fragile banking system of Nigeria, the need for recapitalization, the various strategies by Commercial Banks to meet the recapitalization requirements and how recapitalization can enhance repositioning of Commercial Banks in competitive marketing environment of Nigeria. Although the full policy implementation of recapitalization takes effect from December 2005, this study provides an insight into the anticipated challenges of post-recapitalization era. These challenges as evident in the current mergers and acquisitions by smaller banks provide input for academic research and analysis. However, it is also the intention of this study to outline the various repositioning strategies of United Bank for Africa towards meeting the challenges of the Banking Sector reforms in maintaining a leading position among new generation banks in meeting the CBN recapitalization requirement deadline.

It is hope that the finding of this research study would provide a pioneering blue-print for commercial banks in Nigeria to adequately cope with post-recapitalization challenges of the marketing scenario.    

1.1 Statement of the Problem

The rising incidence of bankruptcy and distress syndrome in the Nigerian baking system caused by poor capital base, lack of management expertise, bad debt syndrome corrupt practices and fraud among other have created serious concern to depositors, investors and the rational economy. The need to address this issue has brought the need for redefining the capital base of commercial banks in Nigeria to make the banking sector strong. Dependable and viable with minimal distress and meaningful contribution to the growth of the Nigerian economy. The recapitalization of N25 billion makes it imperative for Commercial Banks to seek for investors and to merge into meet the December 31st 2005 deadline.

The banks that meet up the recapitalization targets may be fewer in number, stronger in capital base, well positioned to carry out full the main challenges before the competing banks is to evolve effective marketing strategies to attract customers to patronize their services and to maintain a leading position in the industry.

United Bank for Africa as a successful emerging bank under the new recapitalization policy has a well designed, modern financial marketing network, better positioned for the post-recapitalization competitive marketing of financial services in Nigeria.

This study makes a critical analysis and examination of the marketing activities of United Bank for Africa Plc, Abuja designed to achieve competitive advantage. It is hope that the finding of this study would provide an important blue-print for effective modern marketing of banking services in Nigeria.

1.2 Objective of the Study

The main important objective of this study is to examine positioning strategies for competitive advantage through recapitalization in the banking industry with a special reference to United Bank for Africa, Kaduna. The study is specifically design to achieve the following objectives: 

a) To present the various shortcomings of the current banking system, of Nigeria

b) To provide the rational behind the CBN recapitalization policy for commercial banking in Nigeria

c) To identify the challenges facing commercial banks towards the dateline for recapitalization 

d) To find out the vicarious plans of action or strategies for competitive advantage at post-recapitalization epoch

e) To provide recommendation and solutions identified by the study 

1.3 Research Questions

This research study intends to address the following research questions:

a) Why should the minimum capital base for commercial banks in Nigeria be raised to N25 billion?

b) Can recapitalization of the banks result in the desired positive change for the Nigerian economy?

c) What are the implications of the reform on the existing job situation in the country include the job security in the banking industry?

d) What will happen to customer accounts (loans and deposits) for banks that cannot meet the requirement?

e) If a bank acquired or goes into mergers in the existing consolidation process, what does this imply for bank’s existing customer that do not fall within its redefined target market?

f) Beyond the N25 billion are there further increases in the capital requirement for banks in future?

1.4 Significance of the Study

The significance of this study has essentially on the important contributions made by the study to individuals commercial banks, investors, financial analyst and other interested in the genuine development of the Nigerian banking system through recapitalization.

First and foremost, the management of United Bank for Africa would find this study very compressive in presenting the clear picture of the crisis and conflicts in the Nigerian banking system, including strategies to meet the CBN recapitalization through various mergers and consolidation strategies. In addition, the views of seasoned bankers researchers and financial analysts on the future of the Nigerian banking system under the recapitalization policy would by providing to make it easier for the bank to discern area of threats as well as opportunities in the years ahead.

Secondly, recapitalization being a new concept in the baking industry and even in academia, thus research project would provide an important reference material for people from all walks of life, including students, bankers, investors and the general public. Finally, it is also hope that the various suggestions and recommendation presented in this study would serve as effective strategies in meeting the post-recapitalization marketing activities of commercial banks in Nigeria.  

1.5 Scope of the Study

This research study focuses on the marketing activities of United Bank for Africa, Kaduna. Though data collection might be centrally to be done through the head office in Kaduna but the analysis and interpretation of findings may cover all the state branches in Kaduna. 

1.6 Limitation of the Study

a) Uncooperative Attitude of Respondents: The bank used as case study initially did not cooperate with the researcher due to the fact that in the current competitive environment, an organization regards any persons who comes for an enquiry as a spy on the activities who used by their competitors to undo them in the market place. This explains the uncooperative attitude of the bank that was visited initially. 

b) Time Factor:  this project work was written when academic activities was at the highest peak particularly for us the final year students. Therefore, little time was set aside for this important task.

c) Financial Constraints: This project work was much tasking as it was not easy to obtain materials, the cost involved in typing, photocopying and binding as a student of this level. 

d) Lecturers are also expected to lecture and at the same time supervise a good number of projects, lecturing, which is the main task of every lecturer tend to limit the frequency of project, supervision. Despite these constraints, the main objectives set for this study has been fully achieved.

1.7 Definition of Terms

The following terms and abbreviations used in this study are explained as follows:

⦁ Syndrome: A group concurrent symptoms of a disease. 

⦁ Management: The art of getting things done through and with people in a formally organized way. It is the aid of creating an environment in which people cooperate towards the attainment of group objectives. 

⦁ Service: A service is an intangible offering or benefit that cannot be seen, felt, heard, tasted or smelled before being purchased. 

⦁ Fraud: An act of deliberate deception with the intention of securing something monetary gained by taking an unfair advantage over another person

⦁ Bank Failure: This is where a bank becomes insolvent or whose total property (assets) and intangible right (securities) are insufficient to pay all its debts obligation

⦁ CBN: Central Bank of Nigeria

⦁ NDIC: Nigeria Deposit Insurance Corporation

⦁ Capital: Paid-up capital and reserves unpaired by losses

⦁ Reserves: Surplus resulting from revaluation in the course of consolidation

⦁ Paid-up-capital: Ordinary shares plus non-redeemable preference shares  



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