BANKING

Consolidation may not be literally over until all the Information and Communication Technology (ICT) infrastructure of the merged or acquired banks are fully integrated into a unified whole.

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CENTRAL BANK .
The need for a vibrant banking system is the heartbeat of any economy this has being emphasized by the Central Bank. The industry has been in the throes of restructuring in order to meet the.( 4trn Naira ) minimum capital base. Recognizing the difficulties that may face most banks in meeting the minimum capital base, the CB actively supported consolidation through mergers and acquisitions.
This will result in emergence of reduced big banks after the conclusion of the exercise.

CONSOLIDATION
Consolidation will bring about changes to the banking industry. Such as :
– – The assets of rival banks come together under the control of a single institution,
– New products and services shall be developed.
– The competitive structure of the market will change
– Blue economy will create uncontested market space and make the competition irrelevant.

INDUSTRIALIZATION – PRODUCTIVITY
To support the bullish stances of the Chemical and Heavy industrialization especially development of IRON AND STEEL.
The positive changes will include but not limited to the fact that they will maximize potentials, encourage private sector operators to go into capital Intensive productivity such as :.Electricification will greatly assist the progress of industries dependent on electricity such as electrochemical and the refining industries . Power generation, Automotive industry, Blue economy, Sponsorship of Research and Development get more involved in oil and gas business as well as in Food security,.

DEPOSITORS
Merger and acquisition has been widely used for organizational growth however, it should be ensured that consolidation exercise has a life of its own and no depositor should lose fund after the banks have merged.

POST. CONSOLIDATION COST.
Needless to say that the post consolidation challenges are enormous and visible to discerning observer in the industry, this has further tempted many to conclude that post consolidation challenges are even more daunting than recapitalization itself.
Consolidation has resulted in very high financial cost for banks, including due diligence costs, high costs of redundancy of Its software / hardware where merging banks systems are incompatible. Others include
– Corporate governance credit risk, Operational risk, Skill gap, Regulation and compliance risk, lack of transparency in financial reporting, distress resolution, post consolidation integration, fit and proper test of all ensuring the enthronement of good corporate governace and capacity building.

CAUSES OF FAILURE IN CONSOLIDATION.
Inability to integrate personnel and systems as well as due to irreconcilable differences in corporate culture and management. Resulting in Board and Management squabbles. In addition, the emergence of mega banks is bound to task the skills and competences of Boards and Management teams in improving the shareholders values and balance same against other shareholders interests in a competitive environment. Disagreements over such issues as executive remuneration and perks, dividend policies and appointment of key officers may be some points.
Consolidation may not be literally over until all the Information and Communication Technology (.ICT) Infrastructure of the merged or acquired banks are fully integrated into a unified whole. Additionally, CEOs and Executive Directors need to be more ingenious and alert in choosing a more viable investment alternative capable of bringing superior returns. A well defined code of corporate governace practices should help organizations overcome post consolidation difficulties.
In furtherance to this, regional managers should be armed with necessary power and authority to make decisions in line with the goals of the bank. Hopefully, when these happen, there would be a greater efficiency in the way business is done generally with potential to boost the level of revenue. The much anticipated gains and benefits of consolidation will not automatically come unless banks are repositioed and re-strategized to exploit the new landscape in the industry.

At WufasAgronet, we are competent and reliable Food Technologists into Human Capital and Value Chain Development Consultancy in Food Processing technology.
Detailing Global competitiveness and International Best practices in Food Processing technology.
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