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CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

It is more important or convenient to trace the origin of banking and it meaning before moving into the causes of bank distress in Nigeria economy. Banking originated in England through the activities of the Gold Smiths, who by often keeping money in safes for their customers realized that they could make gain with it by lending to other people on the order hand, they realized that they could cover for unexpected demand by paying interest to depositors.

The process soon attract many depositors and borrowers and this formed the genesis of banking business fully develop England; it was transplanted to West African during colonialism. There has not been any acceptable definition of what a bank is or who is a banker. Several attempt have been made to offer a comprehensive of acceptable definition of the term banker. J.W.Gilbert defined a banker as a dealer in capital or more properly a dealer in money. He is an intermediate between the borrower and lender.

He borrows from one party and lends to another.

This definition emphasis on two traditional functions of bank, which is mobilization of deposit and granting of loans and advances. In Nigeria the banking enacted in 1952 defined banking as the business of receiving from the public, on current account money which is to be repayable on demand by cheque and of making advances restricted the establishment of banks and practice of banking to companies with valid licenses. From these definitions, one can say that a banker is any person or corporative that provides the minimum banking services and which is licensed as bank from federal government of Nigeria as a banking institution.

These minimum banking includes:

Receiptance of deposit from customer, making payment locally or outside, Nigeria, granting loans and advances, trading in securities clearing cheques and fimilar institutions. The rules to be followed for this establishment of a bank are contained in a banking decree 1996 (Section 2 ) which is now replaced by decree No 24/28 of 1991, which gave the CBN the power to license banks”.

The banks are Nigeria can be grouped into three commercial banks, merchant banks and Development bank with the central bank of Nigeria as the Apex bank. Each of these groups renders different types of services to the public as conferred on them by the CBN. Infact, commercial banking in a recent development, most of them are off-shorts of large foreign commercial banks with headquarters in Europe. America and Asia.

Indigenous banking in Nigeria is still in its infact stage. The history of commercial banking in Nigeria data to 1892, when the African banking corporate in London opened a branch in Lagos in 1894 the bank of British west Africa (BBWA), now the first bank was established in Lagos and it took over the African banking ltd. In the indigenous sector, the national banks of Nigeria (NBN) was established on 11th February 1933. This was followed by Africa continental bank ltd. Others are: The British and French bank ltd, now united bank for (UBA) plc which was established in 1949: co-operative and commercial bank (CCB) ltd wema bank ltd; orient bank ltd etc. The period to 1962 was an epoch of bank proliferation in Nigeria.