Impact Of Banking Regulation And Supervision In Commercial Banks

INTRODUCTION
Modern commercial banking in Nigeria dates back to the early period. The decline in barter system of trade and the rise in financial transaction of the colonial government required an institution in the form of commercial bank for safety and transmission of fund. It was for purpose that African banking corporation based in South Africa an was invited in 1892 to open a branch office in Lagos but its existence was made precarious by the trade depression which hit Lagos in that year. In the year 1894, its operations were taken over by the Bank of British West African absorbed the bank of Nigeria and exercised monopoly over banking in Nigeria. In the year 1925 the Bardays Bank started operation in Nigeria, other colonial bank joined in the later years. The indigenization exercised abolished the existence of the expatriate banking in Nigeria their existence was terminated for some of the problem in land as at that time, the review of the history of the development of banking regulation shows that a variety of law regulation and supervisory practice have been involved and that they substantially meet the objective of regulation the current regulatory and supervisory framework approximate practice the world over and involved prohibitation and restriction or some activities of banks that could be termed abusive and highly risky. It also includes supervising nearly every aspect of a bank operation and policy making function. These regulatory provision and supervisory steps and further supported by a wide range of enforcement power for the CBN. The CBN has responded to banking problem over the year. Such responses include the adoption of prudential guidelines on the basal risk based capital requirement increased enforcement authority and greater power and more pragmatic way of dealing with troubled bank.

1.1 BACKGROUND OF STUDY
Union Bank of Nigeria Plc is one of the big three leading commercial bank of Nigeria know as first class commercial bank. Formally colonial bank was of the British West Indies organs and was well rooted in that colony before 1836.
The Act of Parliament in 1961 to allow it operates in other British colonies. In 1917 under the chairmanship of Lord Beaver book. The bank opened new branches in Lagos, Zaria and Accra in Gold Coast. The expansion and growth of the bank was rapid so rapid that by 1920, three year after it started operation in Nigeria. The bank had established three new branches in Port Harcourt, Jos and Kano bringing the total number of the branches of the bank world over to fifteen. Also within this period. (1916) they had grown in assets and liabilities and was competing favourably with BBNA (British bank of West African) as the capital of both banks stood at $200,000 each while the paid up capital was $600,000 for colonial bank and $560,000 for BBWA. The revenue account for the banks and $220,000 BBWA respectively. Under a working arrangement between Union bank of England and some other international banks who had interest in the two banks, the colonial bank was absorbed by Barclays Bank in 1922 the renamed Barclays bank (Dominion, colonial and overseas) like her predecessor the BBWA, the Barclay bank (DCO) became Barclays bank Nigeria limited and subsequently the grant Union bank of Nigeria Plc.

1.2 STATEMENT OF THE PROBLEM
It has observed in Nigeria today, the financial environment has become very vibrant as a result of the economic restructuring that has been in progress since 1986. As a result of which the banking industry has became increasingly complex and competitive.
Consequently, the fundamental drive of this study is to bring into bare the impact of banking regulation and supervision in view of the ever changing financial environment. Some of the problems in our banking industries are stated as follows:
(i) Distress in Nigeria commercial banks
(ii) The inherent weaknesses in the design and implementation of the regulatory supervisory measure.
(iii) The need for consultations of potential operators in formation process.

1.3 OBJECTIVE OF THE STUDY
A research study on banking regulation and supervision is both topical and relevant at a time when government is planning divestment of its share holding in bank and when the upsurge in the number of commercial bank engendered increased competition among the bank as well as between banks and other institution operating within the financial services industry. This had led not only to an available of new financial instruments and product, but reduced margins and less profits. Again, the number of distressed banks has been on the increased and this has meant more responsibilities and anxieties for the supervisory authorities. In conducting this research study, it is hoped that apart from contributing to existing literature on the subject, this research study shall also do the following:
(i) To discuss the concept of banking regulation and supervision in Nigeria commercial banks. So as to get a better view of the operation of the banking sector.
(ii) To identify and discuss various policy measures as contained in the regulatory decrees and show the need for a current decree

1.4 SIGNIFICANCE OF THE STUDY
Establishment and operating a comprehensive banking regulation and supervision in commercial bank reassures confidence in the banking sector in view of current high competitiveness of the commercial bank and multiplicity of branches. The significance of the study lies in the Central banking authorities arising up to the challenges in banks and conducting regular supervision and examination of bank as a means of maintaining surveillance on banking operation to ensure that bank comply with banking law and other directive stipulated by the monetary authorities. Moreover, this study will be useful to Central bank of Nigeria (CBN) authorities lecturers. Corporate organization and the general public at large, it will open new areas for further research work.

1.5 LIMITATION OF THE STUDY
The focus of this research endeavors is on the Nigeria commercial banking industry and the compelling need for bank regulation and supervision to be effective. Their study will be limited to a case study of Union Bank of Nigeria Plc. However, it is necessary for the study to be limited so as to get

DEFINITION OF TERMS
This study is meant to serve different classes of people, it is the believe of the research that not every body will understand some of the key terms used in this study with this in mind, the following key terms are defined.

BANKING SUPERVISION
This is a matter of judgment and prudential analysis to ensure that individual bank observe laid down law and operate within the prescribed monetary policy objectives.

BANKING DISTRESS
This means when a bank is not able to meet balance sheet test of having enough asset at market value to cover its liabilities.

INVESTEMNT
Taking away of share holding from bank of any corporate entity.

BANKING REGULATION
Banking control especially be rules adjust to work correctly, or according to one’s requirement.