EMPIRICAL BANK SYNERGY ANALYSIS.

The Central Bank of Nigeria (CBN) outlines the banking sector reforms to guarantee an efficient and sound financial system. The changes enable the banking system to develop the required strength to support the country's economic development by efficiently performing its functions as the center of financial intermediation. The reforms are designed to build a reliable banking industry that is robust, diversified, ensures the safety of depositors' money, position banks to play active developmental roles in the Nigerian economy, and become significant players in the sub-region, including the global financial markets. The reforms necessitate the increase of the least capital base of N25 billion with a deadline of the last day of December 2005 and the consolidation through mergers and acquisitions. Before the CBN's banking sector consolidation program, the Nigerian banking system is characterized as highly oligopolistic with remarkable features of leadership and market concentration. Small-sized fringe banks characterize the system with massive overhead costs and a low capital base averaging about less than N1.4 billion or about USD 10 million, with a heavy reliance on government patronage. In this article, measurements of the synergy of merged banks are practically analyzed using cash and cash equivalent, deposits, operating income, operating expenses, and profit before and after-tax. However, the overall result, according to the theory of synergy, is in the negative. [ABSTRACT FROM AUTHOR]