Last Updated on September 20, 2023 by admin
The History and Origin of Banking activities in Nigeria can’t be over emphasis , The banking activities started in Nigeria in the year 1892 with the opening of the Africa Banking Corporation in Lagos .The aim of the Bank at that time was to serve British trading interests in Nigeria, such as the Royal Niger Company .
Due to some difficulties the bank folded up its activities and the Bank of British West Africa Limited BBWA was established to take over the activities of African Banking corporation.
The Bank of British West Africa Limited opened its first branch in Lagos in 1894, in the later part of the same year ,the name of the bank was changed to Standard Bank of Nigeria known as the First Bank of Nigeria limited [now a public limited company PLC.
The second bank to be established in Nigeria was Barclays Bank DCO [Dominion colonial and oversea] which opened its first branch in Lagos 1971 Now Union Bank of Nigeria and it has branches in many parts of the country .
In 1949,the British and french Bank was opened [Now United bank for Africa Limited UBA]
In 1933,the first indigenous bank ,National Bank of Nigeria was opened due to discrimination suffered by Nigerians in the hands of foreign banks , businessmen who, being denied credit facilities in these banks, were effectively excluded from the mainstream of the economy.,some patriotic Nigerians came together for the purpose of breaking the foreign monopoly in the banking business .
In 1945, Agbonmagbe Bank [now Wema Bank Plc ] was established. The period between 1892-1952 were regarded by central bank authorities as a period of ” Free of all “banking.This was because at that time there were no regulation to restrict movement and there were no licensing in banking operations in Nigeria which led bank failure as well closure of banks and losses to depositors.
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The bank failure prompted and hastened the first banking legislation in Nigeria called the banking landmark between the period of non regulated banking financial system in Nigeria.
The Period of Regulation
This period could be called the era of regulated banking in Nigeria .In 1958 the central bank of Nigeria [CBN ] was set up as the country’s apex bank [or regulatory authority within the period ,several banking and foreign exchange acts were enacted .
The Central Bank Act, 1958 constituted the legal framework within which the CBN operates and regulates banks. in 1986, of a Structural Adjustment Programme (SAP) resulted in the emergence of more banks and other financial intermediaries.
The Banks and Other Financial Institutions (BOFI) Decrees 24 and 25 of 1991, which repealed the Banking Decree 1969 and all its amendments, were, therefore, enacted to strengthen and extend the powers of CBN to cover the new institutions in order to enhance the effectiveness of monetary policy, regulation and supervision of banks as well as non-banking financial institutions.
The first foreign exchange regulation was promulgated in 1962 known as foreign exchange Act of 1962, the foreign country’s foreign exchange practices. The banking ordinances of 1952 was amended in 1958 and in 1962 replace by the banking Act of 1969.
The 1969 banking act was amended in 1970,1972 and 1974 respectively ; This served as the main banking regulation in the country until 1986 when the structural adjustment programme (SAP) was introduced by Ibrahim babagidda led administration
During this period of review ,many economic activities took place [1971-1980) it was characterized by economic reconstruction and development.
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Two development banks were opened namely the Nigeria bank of commerce and industry established by Degree in may 1973 and Agricultural and co-operative Bank which was established in March 1973 many indigenous banks were opened especially by various states of the federation.
About 124 commercial banks and merchant Banks with 2076 branches were opened throughout Nigeria as at December 1994. The deregulation helped to remake some administrative control in the system and promote a greater reliance of the market mechanism in the determination of interest rate.
In 2004, the first wave of banking reforms in Nigeria began. with the aim of consolidate the existing commercial banks was cut from 89 to 25 in the whole country which make commercial bank richer and more stable.
In 2009 The Asset Management Corporation of Nigeria (AMCON) was found with the aim of helped private banks to fix their financial position. As well, the working field of commercial banks was reduced,
During the post structural adjustment period, there were emergence of new institutions such as Nigeria deposit insurance corporation which was established as a result of the banks distress and aimed at insuring bank deposits against distress.
The Nigeria Deposit Insurance Corporation (NDIC) was set up in 1989 to make sure that banks observe sound and safe banking practices . Also to aid the effective monitoring and supervision of the banks in collaboration with the central bank of Nigeria (CBN).
This was part of the economic reform measures taken by the then government, to strengthen the safety net for the banking sector following its liberalization policy and the introduction of the 1986 Structural Adjustment Programme (SAP) in Nigeria.
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The financial sector experienced bank distress and closure of some banks ,this act called the failed bank[recovery of debts and financial malpractice degree 1994] for proper supervision and monitoring of banks activities.
Other institutions established were community bank , the People bank of Nigeria now micro-finance bank ( MFB)
A lot of monetary policies were put in order to protect the banking system from the adverse effects of deregulation . The minimum share capital of commercial banks increased from N10 million to N20 million Naira in 1989.
A Commercial Bank is authorized to conduct business on a regional basis shall maintain a minimum paid-up share capital of Ten Billion Naira (N10,000,000,000.00).
While A Commercial Bank authorized to conduct business on a national basis shall maintain a minimum paid-up share capital of Twenty Five Billion Naira (N25,000,000,000.00) or such other amount as may be prescribed by the CBN from time to time.
A Commercial Bank was authorized to conduct business on an international basis shall maintain a minimum paid-up share capital of Fifty Billion Naira (N50,000,000,000.00)
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