The Role and Effect of Merger and Acquisation in Bank Recapitalization in Nigeria
INTRODUCTION
Merger can be defined as the combining of companies; the joining together of two or more companies or organisations and An Acquisition can be defined as the act of acquiring something According to the Encarta Dictionaries. According to answers.com, Recapitalization is restructuring a company’s debt and equity mixture, most often with the aim of making a company’s capital structure more stable. Essentially, the process involves the exchange of one form of financing for another, such as removing preferred shares from the company’s capital structure and replacing them with bonds. Recapitalization in Nigeria banking sector, has built a solid foundation for Nigerian banks to compete favourably with their counterpart world over. Recapitalization causes unemployment due to downsizing, merger and acquisition, it causes deflation as more money is raked from peoples hand (through sales of shares) In order to build the new capital base. It also leads to current crisis of the banking sector (I.e. the unethical lending’s without collateral as the banks has so much money to give to nobody as the recapitalization is aimed at attracting foreign investors that cries of the country’s weak financial/capital market.
BACKGROUND OF THE STUDY
GLOBAL VIEW
Abstract We study the stock market valuation of mergers and acquisitions in the European banking industry. Based on a sample of very large deals observed from 1988 to 1997 we document that, on average, at the announcement time the size-adjusted combined performance of both the bidder and the target is statistically significant and economically relevant. Although our sample shows a great deal of cross-sectional variation, the general results are mainly driven by the significant positive abnormal returns associated with the announcement of domestic bank to bank deals and by product diversification of banks into insurance. On the contrary, we found that M&A with securities and conclude with foreign institutions
Merger can be defined as the combining of companies; the joining together of two or more companies or organisations and An Acquisition can be defined as the act of acquiring something According to the Encarta Dictionaries. According to answers.com, Recapitalization is restructuring a company’s debt and equity mixture, most often with the aim of making a company’s capital structure more stable. Essentially, the process involves the exchange of one form of financing for another, such as removing preferred shares from the company’s capital structure and replacing them with bonds. Recapitalization in Nigeria banking sector, has built a solid foundation for Nigerian banks to compete favourably with their counterpart world over. Recapitalization causes unemployment due to downsizing, merger and acquisition, it causes deflation as more money is raked from peoples hand (through sales of shares) In order to build the new capital base. It also leads to current crisis of the banking sector (I.e. the unethical lending’s without collateral as the banks has so much money to give to nobody as the recapitalization is aimed at attracting foreign investors that cries of the country’s weak financial/capital market.
BACKGROUND OF THE STUDY
GLOBAL VIEW
Abstract We study the stock market valuation of mergers and acquisitions in the European banking industry. Based on a sample of very large deals observed from 1988 to 1997 we document that, on average, at the announcement time the size-adjusted combined performance of both the bidder and the target is statistically significant and economically relevant. Although our sample shows a great deal of cross-sectional variation, the general results are mainly driven by the significant positive abnormal returns associated with the announcement of domestic bank to bank deals and by product diversification of banks into insurance. On the contrary, we found that M&A with securities and conclude with foreign institutions