THE PROBLEMS AND THE REMEDIES OF MERGER AND ACQUISITION WITHIN THE BANKING INDUSTRY (A STUDY OF ACCESS BANK OF NIGERIA)
BACKGROUND OF THE STUDY
Merger according to oxford advanced learners Dictionary is the act of joining two or more organizations or businesses into one. While Acquisition is something that somebody buys to add what they already own usually valuable. Thus, business organizations are recently seeing consolidation (merger and acquisition) as an alternative fast-paced dynamic environment in the business world in general and in the banking industry in particular has highlighted the significance of mergers and acquisition.
Meanwhile banks plays a crucial role in propelling the entire economy of any nation of which there is need to reposition it for efficient financial performance through a reform process geared towards forestalling bank distress. Kaur and Kaur (2010) says with merger and acquisition in the banking industry, the size of banks will increase the efficiency of the system. Akhtar (2002) also added that the intense competitions among banks, rapid speed of innovations and introduction of new products, changing customer’s demand and desire have change the way banks conduct business and services to its customer’s and this sophistication in banking and changing customer’s desire calls for the merger and acquisition of banks to achieved value maximization.
Therefore, merger and acquisition are a global phenomenon and the banking industry his experience changes all over the world. These changes may be derived from several forces including globalization deregulation and technological advancement.
Ismail and Davidson (2007) argue that regulation changes removes product and geographical restriction on banks. Technological advancement enables the banks to perform their services system such as bank-office processing, online e-banking and payment system (Humphrey et al, 2006). These changes have led to the consolidation of banks through merger and acquisitions. Banks merger and acquisition occur when pervious distinct banks are consolidation into on institutions. Supporting this assertion, Kaur and Kaur (2010) adds that merger occurs by adding the bidder banks assets and liabilities to the target banks balance sheet and acquiring the bidder’s bank name through a series of legal and administrative measures.