Title Page                                                                                 Page

TITLE PAGE                                                                                             





TABLE OF CONTENTS                                                                            


1.0     Introduction                                                                            

1.1     Historical Background                                                             

1.2     Purpose of Study                                                                     

1.3     Significance of Study                                                                        

1.4     Statement of Problem                                                                       

1.5     Scope and Limitations of Study                                                         

1.6     Research Hypothesis                                                                         

1.7     Research Methodology                                                            


2.0     Literature Review                                                                    

2.1     The Role of the Banking Industry                                                  

2.2     Historical Background                                                             

2.3     Review of Previous Work                                                        

2.4     Review of Related Literature                                         

2.5     The Impact of the Research                                                     


3.0     Research Design                                                                               

3.1     Study Population                                                                     

3.2     Methods of Data Collection                                                              

3.3     Characteristics of Study Population                                          

3.4     Research Instrument Specification                                           

3.5     Method of Analysis                                                                 


4.0     Introduction                                                                  

4.1     Data Analysis and Presentation                                      

4.2     Test of Hypothesis                                                         


5.0     Summary, Conclusion, and Recommendation                  

5.1     Summary                                                                                

5.2     Conclusion                                                                    

5.3     Recommendations                                                         







The potential crisis that is looming in the Nigerian banking industry can no longer wait to be addressed other than what could be witnessed in the revolutionary instance taking by Prof. Charles Soludo, directives on the N25b capitalization base for banks who wish to operate in Nigeria Economy.

In addressing the financial institutions, he maintained that the directive is part of a series of reforms to get the banking sector in the modern proper shape, to have a banking system “where people can afford to put their money and go to sleep”, where investors can rely on the banking sector to provide long term credit and to develop a banking sector that can respond to demands of globalization for global competitiveness. Fundamentally, it is designed to prevent a potential systematic crisis that is looming in the banking sector where you have 89 banks all of which put together happening to be less than one bank in South Africa, where the most capitalized bank in Nigeria has less than 50 percent of the capital base on the least capitalized bank in Malaysia; where indeed none of our banks is big enough to be able to transform the economy.

According to Soludo( 2006), among the 89 banks we almost cannot count on your fingertips, how many of them are really involved in the real act of banking, he described most of the banks as traders who just collect banking license, use the connection to get public sector deposit, trade-in government treasury bills, trade-in foreign exchange and open letters of credit in the Nigeria economy. We have a weak banking system where nobody can put his money and go to sleep and that is why confidence in the system is impaired.

Considering the banking sector as the life wire of economic growth and development of any economy, what is obtained presently is a backdrop, hence N25b capitalization is needed to sanitize the industry particularly the entire economy of Nigeria.

  According to DoyinOdunfa (2005) Said during the unveiling of this year’s web-jurist rating for the financial services sector that 25billion naira capitalization would create several opportunities and harness banks' potentials and capitalization to drive e-banking in Nigeria.


The statement of the problem in question here formed to enhance a clear articulation. This image is built up by information about the company while information is also centered on dividend payout, earnings announcement, and management potentials. The questions awaiting instant answer are:

What are the effects of N25b capitalization on Nigeria financial institutions? What meaningful choice of the option was available (whether merger or acquisition) and its effect on employees and ownership control. What effect has this capitalization depict on the consumers of the services rendered by the banking sector.


The purpose of this study is to attempt to answer questions raised in the statement of the problem of this research work. Such includes:

a.       To examine and assess the ability of the new regulation and to sanitize the banking sector of the economy.

b.       To identify the various effects and measures of performance evaluation on customers, employees, and the bank as a whole.

c.       To carry out a detailed performance evaluation of the selected case study.

d.       Recommending viable solutions to these problems and prospects.

The study is also expected to determine the effects and impact of N25b Capitalization on the Banking Industry in Nigeria. It will be of great help to the economic planners, academicians for future review, mostly banking executives and top-management of banks and statutory agencies governing and regulating the institutions.


The importance of the research question is to guide the researcher on the specific methods and the procedures for acquiring the information needed to structure or solve the problem under consideration. The method of collecting data for this research was through primary and secondary sources of data collection. The primary sources were through questionnaires given to some of the staff of the case study organizations and personnel interviewed while secondary sources were through documented literature such as CBN annual report, NDIC annual report, financial dailies, seminar papers, journals, and textbooks.


This study will seek the following answer for the question:

H0:   The twenty-five (25) Billion naira capitalization does not have an effect on the banking industry in Nigeria. H1:   The twenty-five (25) Billion naira capitalization will have an effect on the banking industry in Nigeria. H0:   The twenty-five (25) Billion naira capitalization will not have an impact on the loan syndication of Banks. H1:   The twenty-five (25) Billion naira capitalization will have an impact on the loan syndication of Banks. H0:   The twenty-five (25) Billion naira capitalization will not help to build customers' confidence in the banks. Hl:    The twenty-five (25) Billion naira capitalization will help to build customers' confidence in the banks. H0:   The twenty-five (25) Billion naira capitalization will not improve the services of the banks. Hl:    The twenty-five (25) Billion naira capitalization will improve the service of the banks.


The significance of this study cannot be over-emphasized, owing to the fact that the banking industry plays a significant role in the economy. Most studies have dealt with profitability and social responsibility as the sole determinants of the performance of the banking industry; few have included other variables like leverage and managerial quality. It is commonly assumed that the Nigerian investors are dividend conscious, therefore, when a company is not paying dividends as when due, there is a tendency for investors to sell such equity. Furthermore, the ability of companies to raise funds from the capital market and the quantum of funds raised is a function of the image of the company in the eyes of the investing public.


Undertaking a project work of this nature is no doubt a herculean task that needs sufficient time and patience, funds and adequate material, commitment, and concentration. However, some of these requisites and other factors combined to mitigate against the success of this project. In this research work, we have examined thoroughly the effects of N25b Capitalization of Banking Industry on loan syndication while proffering some recommendations.

The major constraint envisaged would be that of laying hands-on relevant data and information on the banks and the dearth of adequate record of transactions and their inability to make available their annual year report on time for compilation to the apex bank and relevant authorities. Due to financial constraints, limited time amongst others, the research is limited to three banks, First Bank of Nigeria Plc., Guaranty Trust Bank, and Skye bank Plc. All in Abuja branch. Comments, opinions from questionnaires, and excerpts from the Central Bank of Nigeria (CBN) annual report, financial dailies, journals, and textbooks were also utilized.


First Bank of Nigeria Plc. was incorporated as a limited liability company on March 31st, 1894, with Head office in Liverpool by Sir, Alfred Jones, a shipping magnate. It started business in the office of Elder Dempster& Company in Lagos under the corporate name of the Bank for British West Africa (BBWA) with a paid-up capital of 12,000 pounds sterling, after absorbing its predecessor, the African Banking Corporation, which was established earlier in 1892. In its early years of operations, the bank recorded impressive growth and worked closely with the Colonial Government in performing the traditional functions of a central bank, such as the issue of species in the West African Sub-region.

To justify its West African coverage, a branch was opened in Accra, Ghana in 1896, and another in Freetown, Sierra Leone in 1898. These marked the genesis of the Bank’s international banking operations. The second branch of the bank in Nigeria was in the old Calabar in 1900 and two years later, services were extended to Northern Nigeria.

To reposition and take advantage of opportunities in the changing environment, the bank had at various times embarked on restructuring initiatives. In 1957, it changed its name from Bank of British West Africa to Bank of West Africa.

In 1969, the bank was incorporated locally as the standard Bank of Nigeria Limited in line with the Companies Decree of 1968. Changes in the name of the bank also occurred in 1979 and 1991, to First Bank of Nigeria Limited and First Bank of Nigeria Plc., respectively. In 1985, the Bank introduced a decentralized structure with five regional administrations.

First Bank got listed on the Nigerian Stock Exchange (NSE) in March 1971 and has won the NSE president’s Merit Award eleven times for the best financial report in the banking sector.

In 2002, the bank established the first offshore financial subsidiary of a Nigerian owned bank in the UK and in 2005 acquired two banks – MBC

International bank ltd & FBN (Merchant Banker) Ltd

In 2007 floated first-ever hybrid capital offering out of Africa ( first bank Nigeria)

The origins of Skye Bank date back to 1989 when Prudent Bank Plc., was incorporated as a limited liability company. In 1990, the bank was issued a license as a merchant bank. That same year, it rebranded as Prudent Merchant Bank Limited. In 2006, Prudent Merchant Bank Limited merged with four other banks to form Skye Bank Plc.:




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