RECAPITALISATION OF THE BANKING INDUSTRY IN NIGERIA: APPRAISAL OF MERGER AND ACQUISITION

Abstract

In recent times, the current macroeconomic problems and headwinds caused by external and local shocks have highlighted the necessity for banks to increase and sustain sufficient capital to bolster their resilience, solvency, and ability to support the expansion of the Nigerian economy. Thus, the Central Bank of Nigeria (CBN) in the recapitalisation circular dated March 28, 2024, announced an upward review of the minimum capital requirements for commercial, merchant, and non-interest banks in Nigeria and banks may consider various options to meet the minimum paid-up capital such as mergers and acquisitions, upgrade and downgrade of license authorization and injecting fresh equity capital. In line with the recent circular, this paper appraised merger and acquisition in the context of bank recapitalisation. A doctrinal methodology was adopted in achieving the appraisal by consulting primary sources of law such as the Federal Competition and Consumer Protection Act 2018, Companies and Allied Matters Act 2020, Investment and Securities Act 2025, and secondary sources of law garnered from journal articles and newsprints that were subject to content analysis. The paper revealed that to improve the capital basis of Nigerian banks as well as the stability of the banking sector, the Central Bank advocates mergers and acquisitions as a consolidation option. It further revealed that an inadequately managed merger frequently results in collective disaster and the demise of synergy. Conclusively, merger and acquisition activities have served as a benchmark for assessing the growth and performance of the Nigerian economy. The paper recommends that integration must be comprehensive, adaptable, and well implemented because the determinants of post-merger performance and long-term sustainability hinge on the engagement and integration of employees from the outset to establish a unified identity centered on a collective goal.