Bank consolidation policy in Nigeria is a measure to increase?

A. the capital base of banks
B. employment opportunities in banks
C. the number of shareholders
D. the number of branches

 
Correct Answer:

Option A – the capital base of banks

Explanation

Bank consolidation is the process by which one banking company takes over or merges with another. This leads to a potential expansion for the merging bank. It is usually done to maintain and reach the required capital base as instituted by the central bank.

A bank’s capital base is the “cushion” for potential losses, that protects the bank’s depositors and other lenders. It is the required amount set aside in assets to mitigate against losses.