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CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

According to Akngbola (2010) there is no gain saying that  the concept of universal banking has gained more  currency that any other issue and has also shot up to the front burner of national economic discourse particularly in banking circle in the last one decade exigencies market dynamics and trends in international money market has led to the approval and re-examination of the of the structure scope functions of banking institutions in the country.

Okehi (2010) however went further to say what until about a decade ago, no definite well assembled and articulated positions were made for universal banking due largely to the prevalence of conducive macro- economic environment for  the  continued  demarcation of the functions of retail and investment banks, however the faltering of the economic attendant inclement operating environment for banks.  The perceived absence of a level playing field between retail and investment banks and the recent harmonization of the equity of all banks have collectively awoken and driven the present call for the establishment of a new banking order where all banks are treated as equal.

The performance of the Nigeria banking sector has been a serious concern to the generality of Nigeria. Such Nigerians includes but are not restricted to politicians, the military, the academic community, industrialist, traders, and even the peasant community. As one reflects on the present state of the sector, one cannot but come to the sad conclusion that all is not well.

Actually, the method of expressing the dissentient within the banking sector may be varied but there is humanity in feedings. These feelings have one interpretation, which can be described in a polite language as bewilderment at the modes of operation of banks.

The questions that readily comes to mind is encapsulated in one sentence; what is wrong with our banking sector? other questions fact draws from this includes.

(i)  Is the problems that of management?

(ii)  Is the problem that of poor regulatory policy by the controlling authorities?

(iii)  Is the Nigeria banking environment inherently defective?

Whatever the reasons that can be adduced for the unimpressed performance of this subsection, one thing is crystal clear, the banking sector is sick and may have lapsed into comma, therefore a serious surgical operation may be required to revitalize and sanitize it.

Furthermore, inspite of drastic changes that took place in the Nigeria Banking sector within the last decade in the area of institutional framework, legal and regulatory financial, the overall performance of this industry can be said to be grotesque, absent and in congruous with the expectation of Nigerians. (Emekewue, 2003).

With the ever – increasing deregulation and liberalization of the financial system and the revolution in information technology, the Nigeria economy cannot but be affected by the globalization of the world economy. It will be faced with foreign competition for it is handily position for Nigeria to benefit from position result  this phenomenon,  such as capital flows, it  mater have a health and sound financial system and institution with the capacity to play the global gave efficiently and effectively (CBN) Ballion 2003.

Moreover, within the context of globalization, deregulation and liberalization, the preference will before a system that permits unfettered choice which is a vote for the universal banking, where the financial bankers between banks are removed and scope and operation of banks enhanced.

This, the concept of universal banking will allow banks the authority to decide on its portfolio of business, select appropriate delivery channels and faculties within an appropriate and applicable regulatory framework. The distinction between money, capital market and insurance business is survived, and the emergence of large financial conglomerates and banking group will be encourage.

1.2         STATEMENT OF THE PROBLEM

The banking crisis that gives rise to the failure of may banks has brought the venerability of the banking sector to constant focus. The failure may banks in fail country has not only posed integrity question but has greatly reduced the confidence, which is the greatest assets of banks.

This the researcher intends to study and examine the impact of the universal banking in Nigeria financial system and to make appropriate recommendation for optimum performance. 

1.3         PURPOSE / OBJECTIVE OF THE STUDY

The strategic importance of the financial system cannot be over emphasized in every economy.  (Anyanwu Okoro, 2003) . This continuos emphasis stern from very sensitive nature of the financial which control a substantial interest in the system.. Hence, the objectives of the research are :-

(i)   To examine the overall performance of the Nigeria banking system prior to the introduction of the universal banking as a foundation in justifying its relevance to the nations financial system.

(ii)   To find the problems that

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