AN EXAMINATION OF THE TECHNIQUES OF MANAGING FINANCIAL DISTRESS IN THE NIGERIA BANKING INDUSTRY.
1.1 BACKGROUND OF STUDY
The issue of financial distress in the Nigerian banking industry has became the ‘Conequences of bnak failures, the problem has became a major source of concern to the government, the regulatons of financial institutions and to the general public. The experience of Nigerians during the first era of bank failures in Nigerian between 1953 to 1959 was such that generated understandable apprehension among the banking public. Unfortunately, the problem has reducing up till now in the Nigerian financial system. Also distress in Nigerian banking system is a phenomenon that must be tackle with every amount of Vigour in order to minimize its occurrence in the economy.
Although, Nigerian thought this was a good own for the economy, it soon downed on them that the perceived boom was a mirage and gross mismanagement. The increasing number of distress in the nations banking industry has impacted negatively on the economy by slowing down the tempo of business activities. The courage also effects some government and some healthly banks which have cost some of the confidence which they had enjoyed before the issue of banking distress become pronounced.
1.2 STATEMENT OF PROBLEMS
Financial distress in the Nigeria banking industry will therefore occure when a fairly reasonable proportion of banks in the system are unable to meet their obligations to their customer as well as their owners and the economy as a result of weakness in their financial, operational and managerial condition which have rendered them either insolvent. Also is a situation in which a sizable proportion of financial institutions have liabilities exceeding the market value of their assets.
A financial institution is said to be in distress where evaluation by the supervising authorities depicts the institution as deficient in the following criteria.
a. Weak Management, reflected in the poor credit quality, inadequate internal controls. High rate of frauds.
b. High level of classified loans and advances
c. Gross under Capitalization relation to the level of operation.
d. Illiquidity, reflected in the inability to meet customers cash withdrawals.
1.3 OBJECTIVE OF THE STUDY
In view of the above problems of distress in the banking industry, this study in word term aims at examining the techniques of managing distress in the banking industry. This objecture in specific terms could be states this.
To examine debt recovery and cost reduction as a techniques of managing financial distress in the banking industry.
To also examines bank recapitalization as a techniques of managing financial distress in the banking industry. To examine bank acqusition and merger as technique of managing distress in the banking industry.
Also to make recommendation on haw to mange financial distress in the banking industry.
To also examine bank Recapitalization as a technique s of managing financial distress in the banking industry.
To make recommendation on how to mange financial distress in the banking industry.
4.1 RESEARCH QUESTION
The aim of this study is to examine the techniques of managing financial distress in the Nigerian banking industry. The researcher demand it necessary to formulate the following question.
(i) “Are Debt Recovery and cost Reduction a good techniques of managing financial distress in the banking industry
(2) “Is bank Recapitalisation a good techniques of managing financial distress in the banking industry?
(3) “Are Bank Acquisition and merger a good techniques of managing financial distress in the banking industry?