The History and Evolution of Banking in Nigeria

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Nigeria Banking History

All started in the nineteenth century when Elder Dempster Company bought in a foreign owned bank into Lagos.

History of Banking in Nigeria
History of Banking in Nigeria
  • Standard Bank Nigeria Limited (Now First Bank PIC)

In 1894, a British-owned bank opened its office in Nigeria and operated under the name of Bank of British West Africa. This bank has the credit of being the first banking establisment to practice bank business in Nigeria, At a certain juncture in its history. It changed its name to the Standard Bank for West Africa Limited.

In compliance with the Companies Act of 1968, this pioneer expatriate bank was incorporated in Nigeria as the Standard Bank Nigeria Limited. It has hundreds of branches scattered all over the Federation and has its Head Office in Lagos. This bank changed its name again in 1978 to First Bank of Nigeria Limited, in compliance with the indigenisation decree of 1977.

  • Barclay’s Bank Limited New Union Bank Plc.

Few years after the pioneer bank opened its office in the Nigeria, the Barclays Bank came into the Nigerian Banking scene in 1917. Barclays is an International Bank based in Britain. Like its predecessor (the Old Standard Bank) on the Nigerian scene, the Barclays Bank D.C.O. (Dominion Colonies and Overseas) helped in creating the necessary atmosphere for cultivating banking habits in the country.

Since the Companies Act of 1968, the bank was incorporated in the country as Barclays Bank of Nigeria Limited. The Bank has the reputation of being one of the largest banks in Nigeria with many branches and with its Head Office in Lagos.

It changed its name to Union Bank Limited in 1978 and it is now called Union Bank Plc. following the Companies and Allied Matters Decree of 1990.

  • National Bank

In 1933, the National Bank of Nigeria Limited was establishment by some private Nigeria citizens and it became the first indigenous bank in this country. The bank narrowly survive the crisis that ensued after the 1952 Banking Ordinance because of its inability to meet the demands of the ordinance.

However, the then Western Regional Government subsequently came to the bank’s rescue by gulping in huge capital funds from the resources of the government owned Marketing Board.

Consequently, the management and ownership of the bank was taken over by the Western Region. It had its head office in Lagos and operated hundreds of branches scattered all over the country. In the early nineties, the bank suffered an internal crisis which culminated into its distress in 1990.

  • Agbomagbe Bank Limited (Now Woman Bank Plc)

This was the third indigenous bank to spring up in the country. Agbomagbe Bank was established in 1945 as a private enterprise thrift society.

The bank was taken over by the then Western State Government and it also changed its name to Wema Bank Limited. It maintains many branches throughout Nigeria.

  • African Continental Bank Limited (Now African Continental Bank Plc.)

In 1944, Dr. Nnamdi Azikwe took over Tinubu Properties Limited and later renamed it Tinubu Bank Limited. In 1947, the bank took its present name, African Continental Bank Limited, and opened its maiden office in Lagos (Yaba).

In the 1950s, the bank slipped into the hands of the then Eastern Regional Government, which moved in funds to save the bank from collapsing consequence to the Bank Ordinance of this period.

The African Continental Bank Plc today has more than hundred branches scattered all over the country.

High Bank Mortality in the Early Fifties

Before the early fifties, well over ten banks sprang up in the country. Almost all of them were little different from portable Kiosks, but could not survive the storm ushered in by the 1952. Bank Ordinance due to:

  1. Inadequate capital base;
  2. Inexperienced staffing;
  3. lll-equipped offices;
  4. Stringent conditions contained in the ordinance;
  5. Unskilled management;
  • Nigeria First Banking Ordinance

The government, as a result of its concern over visualised danger posed on the nation’s economy by unregulated banking industry (as evidenced by the proliferation of Mushroom Banks), issued the first Banking Ordinance in 1952.

The Ordinance required:

New banks incorporating in the country to have a minimum nominal capital of £50,000.000;

New banks to incorporate with a minimum paid-up capital of $25,000.00;

Foreign banks not incorporated in Nigeria to show evidence of paid up capital of N200,000.00;

All new banks to obtain a license from the Finance Secretary before operating;

At least 20% of profit must be paid into the bank’s reserve until the vaiue of reserve is equal to the paid-up capital;

No dividend to be paid, until the capitalized expenditure of the bank has been fully written off; and

All banks to submit to the Financial Secretary evidence of adequate degree of liquidity. All existing banks were required to comply with the above requirements within three years.

The Banking Ordinance has proved very effective that subsequent to the high mortality period of Mushroom Banks, Nigeria has been saved from the hazards of greedy money mengers who rush into the banking industry without preparation.

Thereafter, frequent bank regulation has been the watchwords of the-monetarv authorities most especially during this period of dwindling economy. The most recent of these regulations are the Bank and Altied Matters Decree of 1991 and the failed Bank Decree of 1994.

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