Universal Banking

1.1 BACKGROUND OF THE STUDY
The concept of universal banking has in recent times remained a contemporary subject of discuss especially on the readiness of the Nigerian banking industry for the system. The universal banking systems is expected to give the bank right (depending on its corporate objective and core competence) to engage in any financial service ranging from accepting deposit, lending, trading in financial instruments, foreign exchange transaction, underwriting of debts, equity issues, brokerage, real estate mortgage, leasing, investment management and possibility insurance.
This concept is obviously a direct consequence of the globalization wake, which is now turning the world into global village for operators in different sectors of human endeavours. The expectation is that such universal banking would be allowed to engage in all fields of financial services comparable to that of any part of the world.
The banking industry in Nigeria has remained on the cutting edge and trying always to keep pace with the world’s standard, hence the reason for the quest by bank operators for the introduction of universal banking to give an additional leverage to methodology their customers needs and expand operation.
Universal banking operation is no doubt necessary for Nigerian bankers if they want to remain relevant in the international community. Universal banking amongst other things encourages operations with adequate capitalization, which would find profitable diversification into related areas that would add value to customers and improve profitability.
The universal banking concept would also encourage banks to operate in manners, which will bring all financial service. under one roof for the convenience of the customer with all these in mind, a bank which operated like a merchant bank could aspire to expand to a full fledge commercial bank status, embracing both investment and securities operation within group, expand to have insurance brokering arm, acquire an insurance brokering company where necessary to operate in its group.
It could be also decide to remain an investment bank or a merchant bank if it has core competence in this area. (Bullion 2000).

1.2 AFRI BANK PROFILE AND LOCATION
Afribank plc is located at Opara Avenue along Abakaliki express road Enugu. It was registered as a banking industry in 1959. The bank did not change from a merchant bank to a commercial bank rather it started going into universal banking scheme gradually before other banks started clamoring for universal banking.
The bank comprises of seven (7) departments named as follows:
a) The accounts/clearing department
b) The cash unit
c) The transfer department
d) The credit department
e) The customers services
f) The administrative department
g) The internal control department
The bank has a staff strength of fifty seven (57).

1.3 UNIVERSAL BANKING AS PRACTICED BY AFRIBANK PLC.
Insurance represented by its Afribank insurance Ltd, Trustee Activities represented by the Afribank trusteeship Ltd (ATL), Stock brokerage, which is represented by the Afribank brokerage ltd. As can be seen from the above, the bank is also into merchant, commercial banking and insurance.

1.4 STATEMENT OF PROBLEM
The issue of universal banking as a recent phenomenon in the Nigerian banking environment, and as such the practice of the system has been hampered by series of problem.
The first problem of universal banking has to do with agency problem generated between the managers in the corporate headquarters and managers in each business units.
Agency problem rises when the owners or principal organization and the agent who must perform certain or who must implement the plans drawn up by the owner or the highest officer are different people.
On the other hand, a universal banking agency cost consist of the cost of designing explicit contract between corporate headquarters and the business units, the cost of supervising them and the cost of ensuring fulfillment of the commitment the have been acquired. Another problem facing universal banks is the moral hazard problem related to the fact that various agents involved have asymmetric information. The moral hazard problem arises when those who hold important information within organization have interest that are different from those of he people who are responsible for making decisions with information.
Another problem that may be suffered by universal banking concerns the cost of coordinating the various business units. (Prof. Ade T. Ojo).

1.5 PURPOSE FOR THE STUDY
The aims of the study are as follows;
a) To find out who universal banking is applied in Afri-bank.
b) To find out if universal banking will be effective in the Nigerian economy.
c) To find out the challenges universal banking will pose to banking industry operators.

1.6 RESEARCH QUESTIONS
Some pertinent research questions were asked following the problem analysis,
– What role do agencies play in universal banking?
– Is agency necessary in universal banking?
– Why is information needed, important in universal banking system?
– Do universal banking system results to conflicting interest amongst the operators?
– Why do Afri-bank change to universal banking system?
– Will universal banking be effectie in Afri-bank business environment?
– Is the cost a constraint to universal banking?
– Is there any problem encountered in the process of banks changing to universal banking systems?

1.7 SIGNIFICANCE OF THE STUDY
At the end of the study, people will have a better understanding of the system and the desirability of banks going into universal banking system most especially as a positive measure to address the main short comings of the existing banking system that has in the past and is often criticized for not fostering the economic/industrial development of the country.
In the view of its great developmental potentials, some noted shortcomings like conflict of interest with companies, shareholders, emanating from equality ownership issue and complexity could be appropriately taken care of.

1.8 SCOPE, LIMITATION AND DELIMITATION
The scope of the study is only on universal banking in Afri-bank.
Limitation and delimitation, due to some constraints which is not the fault of the researchers, it will not be possible to collect all the necessary data, information for the study some of the constraint is non-disclosure of information by the staff of the staff of the bank which they consider to be strategic and classified data. Another is the non-return of the questionnaire issued to them.
Another area is in that of transportation to and from the case study most often and cost producing research questionnaires.

1.9 DEFINITION OF TERMS/CONCEPT
The researcher takes the following terms to mean these expressions;
a) Universal bank: A universal bank is a bank that performs a diversified function both that of a commercial and merchant bank and at the same time render insurance services.
b) Bankers: It refer to those that are bank operators. It is used interchangeably in this study as employee/staff that are working in the bank.
c) Merchant bank: It is defined as any person in Nigeria who is engaged in wholesale brokering, medium and long term financing, equipment leasing, debt factoring, investment management, issue and acceptance of bills and the management of unit trust.
d) UB: It means universal banking; it will be used often as an abbreviation in this study.
e) Asymmetric information: not having same information.
f) Diseconomies in banks: A situation where banks concentrate more on a particular region of operation with more profit and less attention is paid to businesses with less profitability.