Abstract

“Banking remains a pivotal sector in any economy and that accounts for why developments in the sector usually produce ripple effects in the entire economy. Most if not all economies of the world, try to put in place policies that will guarantee the soundness of the banking sector so as to ensure the soundness of their economies. The ongoing consolidation exercise in the banking sector will expectedly enhance ethical practices and transparency in banking practice in Nigeria. Although, usually sharp practices are occasioned by unbridled competition which tends to, lure some banks to employ all gimmicks available to them to ensure survival: [Alex C.Anameje-20051’. The Central Bank of Nigeria in its search for a more robust and stronger banking system rolled out a 13-point reform agenda on July 6, 2004, directing among others, that operators in the banking sub-sector beef up their capital base to. N25 billion with hill compliance required by December 31, 2005. The recapitalization programme is a continuous exercise and as a result the incumbent Central Bank Governor has urged the ailing banks to recapitalize through Merger &.Acquisition transactions. The bank recapitalization was embarked upon to address the fragile nature of the b4nking system, stop the boom cycle that characterized the sector and evolve a banking system that would not only serve the Nigerian economy, but also serve the regional economy [Chike Nwude, 2005]2 . That is, the wellness of Nigerian banking sector would definitely have impact on her neighbouring states within the WestAfrican region. Prior, to July 6, 2004, there were 89 banks in the financial system and a good number of those 89 banks were fringe operators, depending on the money market and foreign exchange arbitrage for their survival. Consequently, depositors’ .were worried of placing