An Analysis of the Impact of Mergers and Acquisitions on Commercial Banks Performance in Nigeria

Abstract

Mergers and acquisitions (M&A) in the corporate world are achieving increasing importance and attention especially with the advent of intense globalization. This is evident from the magnitude and growth of deal values and resultant ‘mega-mergers’ transacted in recent times. This research work attempts to assess the implication of merger and acquisition of commercial banks in Nigeria on their profitability and other associated measures of performance. The research analysis used published audited accounts of ten (10) out of twenty-four (24) banks that emerged from the consolidation exercise and data from the Central Banks of Nigeria which consists of both primary data. The relevant data collected were analyzed and tested using simple percentage and tables. Subsequently, the three hypotheses formulated in this study were tested using correlation co-efficient (r2) and T-Test. The result of the analysis revealed that there is significant relationship between pre and post merger/acquisition capital base of commercial banks and level of profitability, there is significant difference between pre and post-merger acquisition earnings per shares. Merger/acquisition have also increased the capitalization of commercial banks with evidences of changes in company’s share ownership, increase in the cost of services and changes in bank lending rates. Based on these findings, it can be concluded that the merger and acquisition programme has improved the overall performances of banks significantly and also has contributed immensely to the growth of the real sector for sustainable development

Key-words: Mergers and acquisitions, profitability, capitalization, commercial banks and Earnings per share