Accounting Project Topics

The Problem Facing Commercial Banks in Nigeria (A Case Study of Union Banks of Nigeria United Banks for African and African Bank)

The Problem Facing Commercial Banks in Nigeria (A Case Study of Union Banks of Nigeria United Banks for African and African Bank)

The Problem Facing Commercial Banks in Nigeria (A Case Study of Union Banks of Nigeria United Banks for African and African Bank)

Chapter One


This work aims at investigating the problems which commercial banks in Nigeria face with a view to ascertaining how for the commercial banks have been fanny as regards these problems and to recommended appropriate remedies that would minimize the problems.  It is also an attempt to suggest ways in which these problems can be avoided in the futures taking into consideration the adage that say “prevention is better than cure”

In other word the researcher intends to examine the roles performed by the commercial banks and to carry the necessary evaluation.



This chapter reviews relevant text or literature of the contributions of scholars and researcher on commercial bank such issues that are contained here are origin of commercial bank evolution of commercial banking in Nigeria function of commercial bank and ways of regulating the activities of commercial banks.


Commercial bank may be defined as a financial institution which deals in money and credit and which receives deposits from the public and from organizations. Some of which are repayable on demand by cheque. Commercial banks are public limited companies owned by shareholders they operate on a commercial basis that is they are out to maximize profits by trading in money. They differ from other banking financial institutions because they hours cheques drawn by their customers on their demand deposits


Commercial banking arose from the activities of goldsmiths of valuables. Merchants and other people who had valuable (especially precious metals such as gold and silver which were used as money) deposited them with goldsmiths. They therefore performed an important function of commercial banks the acceptance of deposits. At first they charged the merchants and other depositors some fees for performing this function for them.

In exchange for the valuable deposited the goldsmith issued receipts for various weights or values deposited. The valuables deposited. The valuables deposited were to be repaid on the presentation of the receipts. The person (or merchant) who deposited he valuables found out that the could use the receipts issued to him by the goldsmith to make purchases. The receipts therefore later become means of payments. The merchant who now receives the receipts from the depositor could present the receipts to the goldsmith and claim the valuables.  On the other hand he could use the receipts to make other purchases. Whoever presents the receipts to the goldsmith is given the valuables worth the amount on the receipts. Since the receipts issued by the goldsmiths were used as money they became the first issuers of bank notes a function, which was originally performed by commercial banks.

Experience showed the goldsmiths that many depositors did not present their receipts for repayment until after a relatively long time. In other word they always had surplus money or valuables left with them at any point in time. They required a comparatively small proportion of total deposits to meet their customer’s demands. They therefore under took the third function lending of money. They could safely lend part of the deposit and charge interest for so doing. The made large profit form this trade.

Therefore to increase their profitability they had to attract more deposits from people by offering to pay them interest on their deposits. The more deposits they attracted the more they could lend out and increase their profits.


Modern commercial banking in Nigeria dates back to the earlier colonial period. The African corporation was established in Nigeria in 1892 as the first bank in Nigeria.  The bank was taken over by Elder Dempster and company.  With ran it as a private bank unit December 1892 when the bank of British West African (low know as first bank of Nigeria PLC) was organized and registered in London. BBWA remained the only bank in Nigeria unit it was joined by Barclays bank Dominion colonial and overseas 18years late in 1912.

Another expatiate banks the was established during the period was the British French bank limited which was established in 1949.

The indigenous sector national bank of Nigeria which was established on 11th February 1933 has the unique distinction of being the first successful indigenous bank in the country. The African continual.  The African continental bank limited (ACB) started as a private company in 1937 as Tinubu properties limited. Ten years later in January 1947 the name was changed to Tinubu bank limited final in November the same years it was registered as the African continental bank limited. It commended operations on 1st September 1948 before 1948 there were only five banks three indigenous and two expatriates. Just as banks were established and some survived during the free banking era some banks also failed during the period.




This chapter discusses the methods and procedure use to find out more facts about the project under study with a view to achieving desire objectives. The methods employed a combination of empirical study and library research.


For the purpose of this study the sources of data employed are to be broken down in to two namely primary data and secondary data.  The data gathered from these two sources were analyzing critically to achieve the objective of this study.


The major sources of primary data was the use of oral interview with various people who are vast in field and also the write sought personal opinion of different people the oral interview was aimed at eliciting the inflexibility normally imposed by written questionnaires.  It was also structured in such a way as to give detailed information as would allow for quick gathering of analysis.

Observation implies in its real sense the use of the eyes rather than of the ears and the voice. The concise oxford dictionary defines it as accurate watching and noting of plenary as they occur in nature with regard to cause effect or mutual relations the society where the project topic was raised observed what was going on around it conversation interviews and records supplemental this.


In addition to the above sources of data intensive library searchers were covered records and publications of the commercial bank in Nigeria monthly quarterly and annual reports economic and financial reviews report and publication of the federal ministry of finance. Journals in Nigerian commercial banks magazines and newspapers.

The research for relevant information took the researcher to the libraries of the following institution like institute of management and technology university of Nigeria Enugu campus Enugu state university and technology ministry of finance and economic planning.

The data used were collected from both banking sector data collection techniques were randomly selected and visited with questionnaires compressing and open and close ended questions. The researcher first established a very nice report among the staff cared cared the available manager to enable him interview and distributed the questionnaires with ease. The aim of the interview was simplified before administering the questionnaires seventy percent of those interviewed were educated self administered questionnaires were used.

The non-banking sector involved in the survey to find cut the impact of problem on commercial bank. These include businessmen and women.



This chapter mainly specifies the responses from the various research questions. The techniques use in interpreting and analyzing the data were through construction of tables’ frequencies and simple prostrations.  Most of the questionnaires needed responses.




The purpose of this chapter is to present the summary of the whole study make some recommendations to problem facing commercial banks draw us some inferential conclusion research to include are of further research to problem facing commercial banks and to problem facing commercial banks and to those in some kinds of distressed.


I wish to focus attention on the most important function of every commercial bank which is to mobilize saving form the surplus sectors and lend to or make them available for borrowing by the deficit sectors. The efficiency of any commercial bank depends on the extent to which this function is effectively discharged.

Nigeria commercial banks are ill equipped  for an effective mobilization of personal saving the management team and board of directors of commercial banks are made up of semi- literate Nigeria and policies are made and unmade in conjunction with the whims and caprices of both local and regional politicians in most cases.

The power struggle within the commercial bankers and the public as a whole is as a result of low integrity factor on our commercial banks. This is unfortunate because their of integrity gives room to poor location of branches and lack of infrastructures in the banking environment.

It was observed that some bankers were reserved in given the relevant answer needed. Despite the constraints the researcher came out with the following findings in respect of the study which is problem facing commercial bang in Nigeria causes and implementation.

  1. The recovery of the economy depends on the fortunes in the banking industry.
  2. Profitability of a bank depends on the qualified personnel.
  3. Bank problem is related to the system of internal control established in the bank
  4. That very few banks are meeting with the technological trend in computerized accounting.


This study carried out serve as a starting point for some other interested researcher who might venture more into finding out better ways and means reducing problems facing commercial banks

If banks can now make use of the various finding recommendation made know in this study by the researcher they would be able to reconcile the problem facing commercial banks and most importantly secure publics confidence.

In all the way forward is for all parties concerned to contribute to a favorable banking environment. In this regard the operated should adhere strictly to the rule of the game. The regulatory supervisory authorities should enhance he supervisory capacity while the government should put in place enable legal macro economics and politician frame works


Prevention of problem facing commercial banks is the responsibility of various parties namely bank director’s shareholders bank management supervisory authorities bank employees and government. However the following specific measures facing commercial banks.

  1. Commercial banks should employ tests and qualified personnel for strategic positions such as to managing directors the general manager and manager of various departments.
  2. Injection of capital by shareholders to increase the capital or equity base of the bank.
  3. The appraisal officers should be allowed to do their work on accordance with the rules and regulations of the bank
  4. People with good managerial ability should be employed to do the work of manageemnt to avoid problems.
  5. Establishing a loan recovery agency in order to competent the failed banks (recovery of debts) and financial mal practices in banks decree No 18 of 1994. There is the need to establish a loan recovery agency with sufficient legal power to facilitate loan recovery.
  6. The government should look into ways of revitalizing he depressed economy of the country in order to avert inflation.
  7. The CNB the ministry of financial and NDIC should scrutinize the ownership structure of serving banks to avoid few shareholder entrenching their favoured nominees to top hierarchy of the bank for purpose of granting dubious loans and advance which is a major factor contributing to the current tragedy in the financial  sector
  8. Commercial bank should devote adequate budget for research and development in the areas of investment opportunities for themselves and their customers.
  9. There is need to establish a profit objective that is realizable
  10. Commercial banks should also tighten their securities so as to prevent bank robberies frauds and forgeries.
  11. Also client management relationship should be encouraged with a view to getting information about difficulties encountered by clients during their contributions with banks. It will enhance mutual respect and encourage by clients to do aware of their obligation to the bank.

Finally for a successful operation commercial bank the commercial bank must clearly spell out its objective identify the resources required to make operation of bank work and their strengths and weakness of both staff and customers.

The management team of commercial banks should be made up of commercial banks should be made up of professional in banking. These members of the board should take reasonable steps to comply with the rules and regulations, which affect the bank.

They should ensure that statements and statistic submitted to monetary authorities are accurate and that their banks obey money polices as directed by regulatory bodies.

The members of the board of directors and management team should provide facilities in the commercial banks and taken the work as their own work without being self- cantered. There is need


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  • Ezeuduij  F.C Bank Failure in Nigeria Causen and Dimensions (1996).
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  • Makiden GC Money Banking & Economic Activity USA Academic Press (1981) R.A.I Anyanwuocha Fundamentals of Economic (1993)
  • Central of Nigeria Annual Report and Statement of Accounts (1997)
  • CBN/NDIC a Study of Distress in the Nigeria Financial Service Industry (1995)
  • Central Bank of Nigeria Monetary Policy Circular No 20 Central Bank of Nigeria Publication (1994)
  • The Leader Distressed Banks Again? Pg 18 March 10 (2007)
  • Ahemed AA the Nigeria Economy and Role of the Commercial Banking Sector” C.B.N Bullion pg 13-14 (1983)
  • Nwankwo G.O “The Philosophy of Banking CBB Bullion pg 6.16
  • Cardoso FB Commercial Banking in Nigeria Functions Organization and Major Problem” CBN Bullion pg 73-78 (1985)
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