Over the years, the Nigerian banking sector has undergone a series of reforms aimed at enhancing
its capacity to support growth in the real economy. To achieve this aim, there is ample evidence
that the Central Bank of Nigeria has relied heavily on bank capital reforms in tackling problems
of under-performance in the sector. Implementation of these reforms has often led to a
simultaneous reduction in the number of banks and increase in bank size, a process commonly
referred to as consolidation. Mergers and acquisitions are common strategies adopted in the
implementation of consolidation programmes. This study seeks to examine the extent to which
banking sector performance differs between pre- and post-merger and acquisition periods. Return
on assets, bank asset ratio and capital adequacy ratio were adopted as proxies for bank
performance. The study employs ex-post facto research design and covers a period of nine (9)
years before and nine (9) after the 2005 banking sector recapitalization exercise. Data on the
variables were analyzed using the independent sample test technique. The study finds that there is
non-significant negative difference in the performance of return on asset in the pre- and postmerger
and acquisition periods. Bank asset ratio shows significant positive difference between the
pre- and the post-merger and acquisition periods. However, the result shows significant negative
difference for capital adequacy ratio between the periods. The study therefore concludes that
mergers and acquisitions have significant impact on banking sector performance in Nigeria. We
recommend that due diligence should adopted in the identification and selection of compatible
partners in order to achieve synergy. In the case of policy-induced merger and acquisition, a
reasonable time should be allowed for compliance and implementation should be closely
monitore
