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CHAPTER ONE
INTRODUCTION
The importance of the banking sector in any economy derives from its roles in financial inter-mediation, provision of an efficient  payment system and facilitating the implementation of monetary policies.On Tuesday July 6, 2004, Professor Charles Soludo the Governor of Central Bank of Nigeria at a special session of the bankers committee in Abuja unveiled a 13 point reform agenda to banks chiefs which included an upward review of banks capital base from N2billion to N25 billion which is the first phase of the banking reforms. The decision according to him to raise the capital base of banks was with the aim of strengthening and consolidating the banking system. Besides strengthening the Nigerian banks with the new capital, Soludo also explained that it is intended to stem the banks distress that has been a problem to the banking sector.
According to him in his paper presented at the special session of the bankers committee in Abuja,The inability of Nigerian Banking System to voluntarily embark on consolidation in time with the global trend has necessitated the need to consider the adoption of appropriate legal and supervisory frameworks as well as comprehensive incentive package to facilitate mergers and acquisition in the country as well as crisis resolution option and to promote the soundness, stability and enhanced efficiency of the system. Soludo (2004:4).The Nigerian banking sector reforms remained a reference point for the positive development in the Nigeria economy, African region and the world. Presently, the new banking environment created by the reforms has made possible the de-listing of Nigeria from the Financial Action Tax Forces (FATF)  register of countries that are in breach of the global anti-money laundering and anti-corruption code.
1.1    BACKGROUND OF THE STUDY
In boosting the effectiveness of the banking industry, Oceanic Bank International Plc plays a vital role by mobilizing funds from the surplus economic units to the deficit units for the purpose of stimulating the economy while making profit to satisfy different interest.Oceanic Bank International Plc was incorporated on March 26, 1990 as a private limited liability company with 100% equity ownership by Nigerian citizens and was licensed on April 10, 1990 to carry on commercial banking and it commenced business on June 12, 1990 at the water front plaza 270 Victoria  Island, Lagos as its head office. In spite of the numerous bank distress observed within the Nigerian Banking sector, the bank has had a relatively good reputation. Oceanic Bank International Plc is one of the largest in Nigeria and has its location in several parts of Nigeria. Her financial year runs from  October 1 to September 30 of the subsequent year.
The bank has had an impressive performance over the years for the quality of its customers portfolio which includes corporate organizations and high net-worth individuals. Following the Central Bank of Nigeria (CBN) reform effort on banks to increase their share capital from N2 billion to N25 billion before 31st December 2005, the bank was among the first that met the requirement. The Oceanic Bank International Plc was listed  on the Nigerian Stock Exchange on June 25, 2004 and at present it’s authorized capital is N32 billion.
1.2    STATEMENT OF THE PROBLEM
The Nigerian Banking System has undergone rapid changes over the years in terms of the number of institutions, ownership structure and as well as operations. These changes have been influenced by challenges posed by deregulation of the financial sector, globalization of operations, technological innovations and adoption of supervisory and prudential requirements that conforms to international standards.The rate of bank failures in Nigeria has constituted a problem because it has risen sharply in recent years. Confidence and credibility were gradually and steadily being eroded and the picture had never been more gloomy and the impending consequences more alarming. The fundamental problems of the unsound banks have been identified to include persistent illiquidity, poor assets quality and unprofitable operations including weak capital base.This research will therefore evaluate empirically the possible relationship between the banking sector reforms in terms of capital adequacy and customers’  patronage as reflected in deposit liability using the financial statement of Oceanic Bank International Plc, between 1999 – 2006.
1.3    OBJECTIVE OF THE STUDY
To ascertain:
1.   The impact of banking sector reforms in respect of capital adequacy on customers patronage.
2.   The rationale of banking sector reforms in Nigeria
3.   The benefits of the banking sector reforms.
4.   The problem faced by customers before the reforms.
1.4 STATEMENT OF HYPOTHESIS
As a guide for the purpose of understanding this work, the hypothesis will be stated in the Null and Alternate form.
 Ho:     Null hypothesisH1:     Alternate HypothesisHo:     There is no direct relationship between Banking Sector reforms in terms of capital adequacy and customers’ patronage (Deposit liabilities).
H1: There is direct relationship between Banking sector reforms in terms of capital adequacy and customers patronage (Deposit liabilities).
1.5 RESEARCH QUESTIONS
In order to facilitate the in-debt understanding of this research a number  of issues came into consideration. In trying to solve them, the following questions will be brought to focus for the purpose of the study.
1.   Does banking sector reforms ensure capital adequacy?
2.   Why should the capital base for banks be raised to N25 Billion
3.   What positive change will the current reforms have on the banking sector
4.   Have the banking sector reforms improved customers confidence?
1.6    SIGNIFICANCE OF THE STUDY
The need of the stability of the banking sector in developing the economy is a major concern by Nigerians. This research work signifies a bold step towards showcasing the implication of the banking reforms to the economy at large. Therefore, the study of this nature will provide critical but useful information to the Nigerian economy the implications of banking reforms and the issue of failed banks.The study will further help in guiding other researchers especially students undertaking similar research topic in ascertaining and forming the basis of further research.
1.7    SCOPE AND LIMITATION OF THE STUDY
Although this research project concerned the banking industry reforms and it’s implications on the Nigerian economy, it will focus on the Oceanic Bank International Plc, Uyo. As it is meant for examination purpose, as such its scope will be restricted to about 65 pages. More so, very limited time allowed, financial constraints and inability to gather useful information from relevant sources will also be a problem to the scope and coverage of this study.
1.8    DEFINITION OF TERMS
The following terms are operationally defined in order to facilitate a comprehensive understanding of this research work and facilitate easy reading.
BANK  - This is an institution engaged in banking
BANKING -  According to BOFIA (1991), “Banking is the business of receiving deposits on current account, savings account or other similar accounts or paying or collecting cheque drawn by or paid in by customers, provision of finance  or such other business as the CBN Governor may by order published the gazette designated as banking business.
BANK CONSOLIDATION – This refers to the reduction in the number of banks, other deposits taking institutions with a simultaneous increase in size of capitalization of such institutions.
ACQUISTION – This is where one legal entity takes controlling interest in the affairs of another legal entity.
RE-CAPITALIZATION – it is an increase of shareholder’s funds through new issues and right issues
.ECONOMY – Is the relationship between production, trade and the supply of money in a particular geographical area.
CAPITAL BASE – This refers to the paid-up capital and the reserves unimpaired by losses.
PAID-UP CAPITAL  – It is the ordinary share plus the non-redeemable preference shares.
RESERVES – This includes all fund reserves except asset revaluation surplus resulting from revaluation in the course of consolidation.
BANKING REFORMS: This means changes in the banking system in terms of capital operation, information rendition and reporting etc.
CAPITAL: Accumulated wealth or money which is used in business. 
END NOTESoludo, Charles (2004), Consolidating the Nigerian Banking Industry, CBNGovernor’s Address to the Banker’s Committee July 6, 2004.

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