ABSTRACT
The study was on the effect of globalization on industrial relations in the Nigerian banking
industry. The thrust of the study is the effect of globalization on industrial relations in the Nigerian banking industry. The objectives formulated were to ascertain the effects of globalization on industrial relations in the commercial banking industry in the South-South states of Nigeria and to determine the relationship between global integration and industrial relations in the commercial banking industry in the area to be studied; other objectives were to identify the basic needs of the industrial workers that have been induced by globalization in the commercial banking industry in the area to be studied and to find out if the Dunlopian model of industrial relations system in the context of globalization could be applied to industrial relations system in the commercial banking industry in the area studied. In pursuit of the objectives, a survey research was carried out in the area and the population used for the study was 7,122. Sample size of 532 was determined using infinite population size statistical formula (Chukwu,
2007).  Data were collected  using questionnaire  and oral interview  and thereafter  tables  and statistical  tools (Z-test, Pearson product  moment  correlation  coefficient  and  chi-square)  were used  for  presentation  and  analysis  respectively.  Findings  of  the  study  indicated  that globalization  had a positive effect on industrial relations practices in the commercial banking industry. The study further discovered that there was a high positive relationship between global integration and industrial relations in the Nigerian banking industry, and the Dunlopian model of industrial  relations in the context  of  globalization  significantly  fit into industrial  relations system  in  the  Nigerian  commercial  banking  industry.  The  findings  also  revealed  that international trade affected industrial peace in the context of globalization. Based on the study’s findings,  the  study thus concluded that industrial  relations  in Nigeria commercial  banks had benefitted immensely from globalization and the Dunlopian model of industrial relations could be effectively applied to industrial relations system in Nigerian commercial banks. The study recommended  that  while  encouraging  global  integration  of  industrial  relations  in  the commercial  banking  industry,  management  and other stakeholders  in the industry  apply the integration dimensions with respect to the Nigerian environment.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The effect of globalization on the economy of many nations can be traced to as far back as
16th century during the time of Adam Smith, David Ricardo and Reverend Malthus. Specifically, the early influences and contributions of these scholars to labour as input of production had early globalization implications (Hoass and Madigan, 1999). The various theories of international trade evolved from these early contributors. Over the past two decades, the Nigerian economy has become more open and liberalized due to the influence of globalization of the world economy. In Nigeria, The amalgamation of the Southern and Northern protectorates in 1914 by Lord Lugard of England had globalization implications. Furthermore, the establishment of Nigeria Breweries Plc in 1946 (Nigerian Breweries Plc (2010), Guinness Nigeria Limited in 1963 (Guinness, 2006) and other Multi-National Enterprises (MNEs) had globalization implications.
Driven by technological advances, improved communications, economic liberalization, and increased international competition, globalization has brought in an era of economic, institutional and cultural integration (Ali, 2005). Scholars are not only analyzing the benefits and the deleterious effects of this phenomenon on the employment relations of developed and under-developed nations, they have also stirred up the old controversy regarding the longer-run trajectory of employment relations systems under the pressures of globalization. The contention is whether the industrial relations systems in the context of globalization are converging or diverging. In comparative employment relations, there are contrasting arguments that there are international pressure leading to convergence and national pressures leading to divergence (Martin and Bamber, 2005).
Literally, globalization entails the process of the transformation of local or regional phenomena to global ones. The process encompasses economic, technological, socio- cultural, political and biological factors (Croucher, 2004). Essentially, the process is holistic and transcends the interaction and integration among people, companies and government of different nations. Friedman (2000) in Yazdani (2009) stresses that the globalization process of today is farther, faster, cheaper and deeper. This position signals the fact that
globalization is given impetus by some key drivers such as international trade and investment across national frontiers, liberalized economic policies, technological advancements, information and communication, and migration.
The multi-dimensional nature of globalization phenomenon leads to the multiplicity of the concept and definition. Ritzer (2004) characterizes globalization as the worldwide diffusion of practice, expansion of relations across continents, organization of social life on a global scale and growth of shared global consciousness. Implicit in this definition is the stress on globalized practices, social interrelationships, and the consciousness of the global world as a whole among key players that involve societies (inter governmental agencies, nation states, companies and individuals (Robertson, 1991, 1992). In consonance with the world culture theory, Robertson (1992) advocates a global world thinking that replicate pattern of socialization, internationalization, individualization and generalization of the consciousness of human kind. Ostry (1977) in Nwosu and Oludayo (2007) opines that among the many domestic policies and institutions that are being and will continue to be subject to the pressures of globalization, none is more fundamental or more politically sensitive than industrial relations.
Industrial relations comprises the institutional arrangements which govern or significantly influence labour market outcomes. In every organizational set up, two indispensable groups are easily discernible. These groups are labour and management. They constitute the pivot upon which the activities of the organization revolve. In times past, early employers saw labour solely as a factor of production to achieve their business objectives. Batstone (1979) quoted by Nwosu and Oludayo (2007), makes it clearer by saying that business objectives were personal to employer and cannot be influenced by labour. In other words, labour had no interest other than provide their services and get paid their entitlements; thus, no input or any role to play in the industrial politics. Having being employed to work, the relationship was that of master-slave. Moreover, Ojo (1990) in Nwosu and Oludayo (2007) asserts that this master-slave relationship began to give way to a formal labour relationship with the
collapse of slavery and the rise of industrial revolution in the 18th and 19th centuries.
The industrial revolution ushered in the progressive formalization of the work place relationship in the form of employment contract. This gave the worker the freedom to examine the job offer, its conditions and prospects before accepting the services or work. Lee (2001) in Izuogu (2007) defines industrial relations as a process by which employers and employees relate regarding the terms and conditions of employment in order to ensure industrial peace and harmony in a workplace. He posits that industrial relations which can also be referred to as labour management relations, can be achieved through collective bargaining and participatory management through the adoption of teamwork, effective communication and good work ethics.
A range of typologies have been proposed by industrial relations experts that all include three characteristics namely union density or the percentage of union members among the employed, collective bargaining patterns such as multi-employer or individual firms, and the scope of legal mechanisms which extend the terms of collective agreements to non- union workers. Industrial relations is as old as industry and a brief historical background suggests that it has its roots in the industrial revolution which created the modern employment relationship by spawning free labour markets and large-scale industrial organizations with thousands of wage workers (Kaufman, 2004). As society wrestled with these massive economic and social changes, labour problems arose such as low wages, long working hours, monotonous and dangerous work, and abusive supervisory practices which led to high employee turnover, violent strikes, and the threat of social instability (Betchoo,
2014).
Intellectually, industrial relations was formed at the end of the 19th century as a middle ground between classical economics and Marxism. Institutionally, it was founded by John R. Commons when he created the first academic industrial relations programme at the University of Wisconsin in 1920. Early financial support for the field came from John D. Rockefeller, Jr. who supported progressive labour-management relations in the aftermath of the bloody strike at a Rockefeller-owned coal mine in Colorado. In Britain, another progressive industrialist, Montague Burton, endowed chairs in industrial relations at Leeds, Cardiff and Cambridge in 1930, and the discipline was formalized in the 1950s with the
formation of the Oxford School by Allan Flanders and Hugh Clegg (Ackers and Wilkinson,
2005).
Industrial relations transformed to a strong problem-solving orientation that rejected both the classical economists’ laissez faire solutions to labour problems and the Marxist solution of class revolution. It is this approach that underlies the current industrial relations practices. Based on the current practices, industrial relations may be defined as the means by which the various interests involved in the labour market are accommodated primarily for the purpose of regulating employment relationships (Macdonald, 1997). It is essentially collectivist and pluralist in outlook and it is concerned with the relationships which arise at and out of the workplace. These relationships are between the workers, the employer and the organizations in promoting and defending the respective interests at all levels. Industrial relations also includes the processes through which these relationships are expressed such as collective bargaining, workers involvement in decision-making, grievance and dispute settlement and the management of conflict between employers, workers and trade unions when it arises (Panigrahi, 2006). These relationships and processes are influenced by the government and its agencies through policies, laws, institutions and programmes, and by the broader political, social, economic, technological, cultural and global characteristics (Macdonald, 1997).
The primary objective of industrial relations is to bring about minimization of conflict and maximization of cooperation. Industrial relations facilitates productivity and induces sound and healthy relations between employers and employees because of the following reasons (i) to safeguard the interests of labour and management in the process of production, (ii) to raise productivity to full employment by reducing high turnover and frequent absenteeism, and, (iii) to establish an industrial democracy based on labour partnership, gains sharing and managerial decisions (Panigrahi, 2006).
One of the significant models of industrial relations was put forth by John Dunlop in the
1950s (Panigrahi, 2006). Several Nigerian authors like Fashoyin, Yesuf, Ubeku, Damachi and others borrowed from the Dunlopian’s system model. The Dunlopian’s model analyses the theories, concepts, structures, practices, outcomes and the institution that are constitutive
of the employment relationship that have paved the way in the establishment of the main framework of the current industrial relations system. The Dunlopian’s model is a system composed of three main actors namely the employees, employer and government and their organization. The model also emphasizes on the context in which the actors interact, the common ideology held by the actors, and the body of rules that govern the system. These are the fundamental components that shape or outline the current industrial relations system (Peretomode and Peretomode, 2001).
Current industrial relations practice is directed at improving the flexibility and skills of the workforce to meet global challenges. These challenges reduce barriers between countries and involve greater integration in the world markets, thus increasing the pressure for assimilation towards international standards (Macdonalds, 1997; Frenkel, and Peetz, 1998; Ali, 2005). Global competitiveness and economic globalization are aimed at increasing the level of interconnectedness among nations for the purpose of bringing about greater economic integration through trade and other exchanges. The process of globalization has given rise to greater competition towards markets and investments. Changes that are sweeping rapidly across the business world have forced businesses and nations to adopt by striving to change the old economic behaviours and traditions. No nation can afford to be behind the pace of globalization if such a nation is to maintain acceptable rate of growth and development because the current tempo of globalization is farther, faster, cheaper and deeper (Friedman 2000, cited in Yazdani, 2009).
Globalization therefore can be defined as a process of increasing worldwide connectivity, integration and interdependence in the economic, social, technological, cultural, political and institutional spheres. It disseminates advanced management practices and newer forms of work organization and in some cases, shares internationally recognized labour standards. Globalization is a driving force in global economic development today and greatly affects the attitude of the workforce as traditional industrial relations will have to deal with entirely new and very dynamic situations (Philips and Earnets, 2007).
Several scholars have given definitions of globalization. To Nayef (2006), globalization is a process that encompasses the causes, course, and consequences of transnational and trans-
cultural integration of human and non-human activities. O’Rourke and Williamson (2000) see globalization as an increase in interaction across borders in areas such as economic cooperation, international trade and investment, technology, personal contact and political engagement. According to Keohane and Nye (1989), globalization is the increasing thickness of globalism. They viewed globalism as a state of the world involving networks of interdependence at multi-continental distances..
The events in the last decade in the global economy suggest a challenge. Yusuf (2003) cited in Izuogu (2007) views the utilization of the opportunity engineered by globalization while at the same time managing the problem and tension it poses as the critical challenged faced by industries and countries. These challenges mount pressures on organizations and nations to assimilate into global practices. Pressures of globalization affect industrial relations at regional, national and international levels. These pressures also interact with national characteristics of the economic and labour market. Investopedia (2012) in Briggs (2014) proposes the merits and demerits of globalization which have been heavily examined and deliberated in recent years. Summarily, proponents of globalization posit that it helps developing nations catch up with industrialized nations much faster through increased employment and technological advances whereas opponents argue that it weakens national sovereignty and allows industrialized nations to move domestic jobs overseas where labour is much cheaper.
The biggest question today is regarding the impact of globalization and its dimensions on employers, employees and their relationships. Supporters of globalization like Onah (2007) asserts that globalization enhances free trade, increases foreign direct investment, increases employment and boosts earnings while critics like Izuogu (2007); Izilibili and Okiri (2003) (also cited in Izuogu, 2007) and Ball, McMcCulloch, Frantz, Gerinder and Minor (2002) argue that globalization in reality has a deleterious effect on the wages, employment, working conditions of most, though not all developing country workers. These negative effects they believe are resulting from competition of multinational enterprises and selective opening of markets to international trade in favour of industrially advanced countries.
Going by Yusuf’s (2003) assertion, virtually all industries and sectors are affected by globalization and the banking industry is no exception. Economists believe that the onset of the global integration means the globalization of industrial services. Many banks had
inherent nationality but at the beginning of the 21st century, the biggest banks in the
industrial world have become complex financial organizations that offer a wide variety of services in the international markets and control huge amount of money and assets (Adekanye, 2006). Supported by latest technology, banks are working to identify new business niches, develop customized services, implement innovative strategies and capture market opportunities globally. Orya (2013) makes it clear by saying that the Nigerian banking industry has shown considerable abilities to raise capital and compete fairly that has drawn attention locally and globally. Consequently, though complex, new concepts are being introduced in the Nigerian banking industry as well as creation of branches outside the country all in a bid to compete with other banks worldwide. Thus, another important element of globalization in the banking industry is the changing attitude and perspectives of the workforce.
1.2 STATEMENT OF THE PROBLEM
Industrial cooperation is a basic requirement for the functioning and the growth of industrialization. Conversely, conflict is common in industries with poor industrial relations practices, and industrial conflict is endemic among human grouping. Industrial conflict causes lack of cooperative spirit and human relations. Manifestation of these symptoms induces industrial unrest resulting in strikes and lockouts, low employee productivity, disruption and delay in production, increase in production costs, high rate of labour turnover and absenteeism. Frequent and prolonged industrial conflict affects the economy and the attitude of workforce as it relates to the importance of negotiations in working life, workers participation and the content of collective agreement.
There is a challenge to ascertain the effect of globalization on industrial relations in the commercial banking industry in south southern Nigeria. It is also difficult to determine the nature and extent of the relationship between global integration and industrial relations in the commercial banking industry in south southern Nigeria. Furthermore, there is a challenge to ascertain the basic needs of the industrial workers that has been induced by
globalization in the commercial banking industry in south southern Nigeria. There is also a challenge to find out if the Dunlopian model of industrial relations system in the context of globalization could be applied to industrial relations system in the commercial banking industry in south southern Nigeria. In addition, it is difficult to determine the effect of the international business aspect of globalization on the industrial peace aspect of industrial relations in the commercial banking industry in south southern Nigeria. This is because issues affecting industrial relations in the context of globalization are exceptionally complex since industrial relations will have to deal with entirely new and very dynamic situations by integrating divergent economic, technological, ethical and cultural activities with labour market flexibility, increasing labour migration, rising atypical and non-standard forms of employment and changes in work contents and working conditions.
These challenges invoke lacks of gateways or barriers that lead to problems which this research work attempts to solve. There is also the problem of negative effect of globalization such as the propensity for imported goods that leads to a decrease in the aggregate demand that affects the international labour market. In addition, the problem of too much government intervention in industrial relations after the voluntary ethics in industrial relations system when the government became more involved in industrial relations as shown by the recent Academic Staff Union of Universities (ASUU) strike which the government has still not remitted the earned allowances.
Therefore, if the industrial relations system in global enterprises including the banking sector (which is far diversifying with global contents) does not adapt to the globalizing world economy and labour market effects, it will impede the establishment of industrial democracy resulting to lack of labour partnership, gains sharing, labour cooperation and harmonious relations. To this end, an investigation into the effect of globalization on industrial relations becomes compelling.
1.3 OBJECTIVES OF THE STUDY
The broad objective of this study is to ascertain the effect of globalization on industrial relations in the Nigerian banking industry. However the objectives are:
(1) To ascertain the effect of globalization on industrial relations in the commercial banking industry in the South-South States of Nigeria.
(2) To determine the nature and extent of relationship between global integration and industrial relations in the commercial banking industry in the South-South States of Nigeria.
(3) To ascertain the basic needs of the industrial workers that have been induced by globalization in the commercial banking industry in the South-South States of Nigeria.
(4) To find out if the Dunlopian model of industrial relations system in the context of globalization could be applied to industrial relations system in the commercial banking industry in the South-South States of Nigeria.
(5) To determine the effect of the international business aspect of globalization on the industrial peace aspect of industrial relations in the Nigerian commercial banking in the South-South States of Nigeria.
1.4 RESEARCH QUESTIONS
This study attempts to provide answers to the following questions:
(1) What is the effect of globalization on industrial relations practices in the commercial banking industry in the South-South States of Nigeria?
(2) What is the nature and extent of the relationship between global integration and industrial relations in the commercial banking industry in the South-South States of Nigeria?
(3) What are the basic needs of the industrial workers that have been induced by globalization in the commercial banking industry in the South-South States of Nigeria?
(4) How effective is the application of the Dunlopian model of industrial relations to the industrial relations system of the commercial banking industry in the context of globalization in the South-South States of Nigeria?
(5) What is the effect of the international business aspect of globalization on the industrial peace aspect of industrial relations in the Nigerian commercial banking in the South-South States of Nigeria?
1.5 RESEARCH HYPOTHESES
The following research hypotheses were formulated to guide the study:
HA : 1 Globalization has a positive effect on industrial relations practices in the commercial banking industry in the South-South States of Nigeria.
HA : 2 There is a significant positive relationship between global integration and industrial relations practices in the commercial banking industry in the area to be studied.
HA : 3 Globalization significantly induced the basic needs (job security, conducive work environment) of industrial workers in the commercial banking industry in the area to be studied.
HA: 4 The Dunlopian’s model of industrial relations in the context of globalization significantly fits into industrial relations system in the commercial banking industry in the area to be studied.
HA : 5 The international business aspect of globalization has positive effect on the industrial peace in the Nigerian commercial banking industry in the area studied.
1.6 SIGNIFICANCE OF THE STUDY
This study is significant because it will provide information that will be of benefit to and be used by:
(1) Shareholders, members of board of directors, managers and staff of the Nigerian banking industry because it will assist in promoting an animating spirit of cooperation and proper regard for the genuine well-being of all the members in the industry.
(2) Officials of Government ministries, departments and agencies in relation to effective performance of their roles as a major actor especially when the issues are of public interest.
(3) Union members in the Nigerian banking industry by encouraging harmonious relationships in the banking sector.
(4) Researchers and students of Banking, Economics, Finance, Business Administration and Management, other allied courses because it will serve as an additional source of information for problems recognition and analysis since the study under investigation is related to these fields.
(5) Employers and employees of Multi-National Enterprises (MNEs) because it will encourage cordial and peaceful employers and employees relations and enhance productivity and economic growth across borders.
1.7 SCOPE OF THE STUDY
The scope of this study is delimited to the impact of globalization on industrial relations practices in the Nigerian commercial banking sector. The major elements under review include the concepts of globalization, industrial relations, basic needs of industrial workers, Dunlopian model, international business and industrial peace; key theories of globalization, international trade and industrial relations; empirical findings on issues regarding globalization and industrial relations, effect of global integration on industrial relations, basic needs of industrial workers in the context of globalization, Dunlopian model, and the effect of international business on industrial peace in the context of globalization; and, industrial relations in Nigeria and commercial banking industry in Nigeria.
The geographical scope of the study is delimited to the six south-south States of Nigeria namely Akwa-Ibom, Baylsa, Cross-River, Delta, Edo and Rivers consequent upon the researcher’s familiarity with the area. Four commercial banks in the six States will be studied. The banks are First Bank of Nigeria Plc, United Bank for Africa (UBA) Plc, Union Bank of Nigeria Plc and Zenith Bank of Nigeria Plc. The choice to study these banks is guided by the fact that they are engaged in global financial services and also have branch networks outside Nigeria.
1.8 LIMITATIONS OF STUDY
The major constraints envisaged in this study are:
(1) The attitude of the respondents: The survey research design has the limitation that some respondents are reluctant to give answers to probes. This limitation is will be minimized by persuading the respondents and by having a covering letter.
(2) The interviewing situation: The oral interview has the limitation that the interviewing situation may change especially if more than one field data collector is used to do the fieldwork. This limitation will be minimized by the researcher doing most of the field work.
(3) Representation of reality: A model to be modified has the limitation that it is only an abstraction or representation of reality. This limitation will be minimized by relying on the respondents in the four banks to be studied.
(4) The structured nature of the instrument: The questionnaire research instrument has the limitation that its structured nature may compel the respondents to give answers that they do not fully endorse. This limitation will be minimized by also using an oral interview schedule.
(5) The open-ended nature of the schedule: The oral interview schedule has the limitation that it contains open-ended questions that are difficult to analyse. This limitation will be minimized by using numbers divided by the total number of schedules returned to give the frequencies.
(6) The cryptic nature of the dichotomous schedule: The dichotomous (yes or no) oral interview schedule for getting responses to implement the two models has the limitation that the answers do not span the entire answer continuum. This limitation will be minimized by using Likert scale responses.
(7) Financial constraint: There is a limitation of the scarcity of money resources. This limitation is minimized by having a balanced budget.
(8) Time constraint: There is also the limitation of the scarcity of the time resources.
This limitation will be minimized by using time management techniques to finish within the prescribed time.
1.9 PROFILE OF SELECTED ORGANIZATION UNDER STUDY
1.9.1 First Bank of Nigeria Plc
First Bank of Nigeria Plc (First Bank) was founded in 1894 by Sir Alfred Jones, a shipping magnate from Liverpool, England. The Bank is a premier bank in West Africa, a leading financial services solutions provider in Nigeria, and has provided excellent banking services since inception hence, contributed to the economic growth and development of Nigeria for
120 years. In 1912, the Bank also acquired its first competitor, the Bank of Nigeria (previously called Anglo-African Bank) which was established in 1899 by the Royal Niger Company (World Finance, 2011). First Bank opened its second branch in Nigeria in Calabar
in 1900 and, 12 years later, extended its services to Northern Nigeria by opening its Zaria branch and in 1928, the Kano branch was opened (First Bank of Nigeria Plc, 2009).
In 1957 the bank changed its name from Bank of British West Africa (BBWA) to Bank of West Africa (BWA). By 1963, the bank had 114 branches in West Africa of which 59 were in Nigeria, 41 in Ghana, 11 in Sierra Leone, 1 in Gambia and 2 in Cameroon (Olalare and Adenugba, 2013). In 1966, following its merger with Standard Bank, UK, and the Bank adopted the name Standard Bank of West Africa Limited and in 1969 it was incorporated locally as the Standard Bank of Nigeria limited in line with the Companies Decree in 1968. Changes in the name of the bank also occurred in 1979 and 1991 to First Bank of Nigeria Limited and First Bank of Nigeria Plc respectively (World Finance, 2011).
First Bank market facing activities are structured along geographic lines. This arrangement recognizes the nation’s historical endowment and the tendency for buyer responses across the economy to take on discernible geographic traits. In 1985, the bank introduced a decentralized structure with five regional administrations. To further enhance its operational efficiency, this structure was reconfigured into fourteen area offices in 2003. On April 1,
2006; this was again restructured into 25 business development offices to deepen customer relationship management in the different target market segments. Furthermore, the business development offices increased to 39 in March, 2008 (First Bank of Nigeria Plc, 2009).
In 2002, First Bank established a wholly owned banking subsidiary in the United Kingdom, FBN Bank (UK) Limited, regulated by the Financial Services Authority (FSA). In this respect the bank is the first Nigerian bank to own a fully fledged bank in the UK. With a ₤1 billion balance sheet FBN Bank (UK) is the largest of all Nigerian banks in that country. FBN Bank (UK) has exploited the UK base further than any other bank, according to the Banker Magazine. In 2007, FBN Bank (UK) obtained authorization to set up its Paris office to serve as a marketing base to service francophone West Africa. First Bank also has a representative office in South Africa and is making progress to establish offices in Asia. The banks intent is to maximize global opportunities for its customers across the world, and facilitate international business alliances in alignment with the country’s established and evolving trade and other strategic relationships (First Bank of Nigeria Plc, 2009).
In 2007, the bank’s N100 billion hybrid offer marked a turning point in the history of offers in the capital market. In the same year, the Bank established a global custody business, emerging as the First Nigerian owned bank to offer such services. In 2008, the bank became the first Nigerian bank and indeed the first quoted company in the country to hit the N1 trillion market capitalization. Currently with over 570 branches, the First Bank Group has one of the largest branch networks in Nigeria (Maitanmi, Okolie and Adio, 2013). As a full- spectrum financial services provider, the products/ services mix of the bank has been designed to cater to the needs of diverse client base. Increasingly strong on services delivered through various electronic platforms, the primary concern of the bank is to improve customer transaction convenience and ease of access to services, as well as strengthen transaction security locally and globally. The bank has recorded very impressive growth and currently occupies a prominent position in the Nigerian banking industry. The bank also emerged in the 2013 edition of top 1000 global banks rating by the Bankers Magazine owned by the Financial Times Group (Chima, 2013).
1.9.2 United Bank for Africa Plc (UBA)
United Bank for Africa Plc (UBA) history dates back to 1948 when the British and French Bank Limited (BFB) commenced business in Nigeria. Following Nigeria’s independence from Britain, UBA was incorporated in 1961 to take over the business of British and French Bank Limited. Although today’s UBA emerged at a time of industry consolidation induced by regulations, and the consolidated UBA was borne out of a desire to lead the domestic sector to a new era of global relevance by championing the creation of the Nigerian consumer finance market, leading a private/public sector partnership at supporting the acceleration of Nigeria’s economic development, and growing the institution from a banking to a one-stop financial services institution, while spreading its footprints across boarder to earn the reputation as a global bank (United Bank for Africa Plc, 2008).
Current UBA Plc is the product of the merger of Nigeria’s third and fifth largest banks, namely the old UBA and eh erstwhile Standard Trust Bank Plc (STB) respectively, and a subsequent acquisition of the former Continental Trust Bank Limited (CTB). The Union merged as the first successful corporate combination in the history of Nigeria banking. UBA
is adopting the holding company model as one of the Africa’s leading financial institutions offering global banking to more than 7.2 million customers across 750 branches in 18
African countries, with its presence in New York, London and Paris and assets in excess of
$19bn (African Community in Europe, 2009).
UBA Group adopted the holding company model in July 2011, and as at December, 2011, the valuation of UBA Group’s total assets was approximately US$12.3 billion (NGN: 1.94 trillion), with shareholders’ equity of about US$1.07 billion (NGN: 170 billion). UBA has maintained a consistent and solid financial performance in its long history. The bank has a history of leading and pioneering innovations in the Nigerian financial sector. The bank highlighted the following as some of the landmark achievements:
(1) The first among international banks to be registered under Nigerian Law in 1961.
(2) The first Nigerian bank to offer an IPO following its listing on the Nigerian Stock
Exchange in 1971.
(3) The only sub – Saharan African bank (ex-RSA) with an office in the US (New
York)- set up in 1984.
(4) The first Nigerian Bank to introduce a Cheque Guarantee Scheme known as
UBACARD in 1986.
(5) The 1st and only Nigerian Bank to obtain a banking license in the Cayman Islands –
1988.
(6) Has a Global Depositary Receipt (GDR) programme – 1998 (1st for a Nigerian Bank as a means of facilitating international investor interest).
(7) Best Domestic Bank in Nigeria (Euromoney 2000).
(8) The 1st Nigerian Bank to obtain a banking license in Ghana -2004. (9) The first ever successful merger in Nigerian banking history – 2005.
(10) Received excellent credit ratings (short and long term); Global Credit Rating (SA) AA+ and A+ in 2005.
(11) The first to introduce the Nigerian Government Bond Index in 2006.
(12) The first ever Nigerian Bank to surpass the N1 trillion balance sheet size (including contingents) – 2006.
(13) Ranked Number One Bank in Nigeria (Agusto & Co, 2007).
(14) Interconnected its 428 branches making it the bank with largest online real time branch network in Africa. An integration process that was completed months before the normal industry average of 36 months.
(15) Launches Nigeria’s first cash deposit Automated Teller Machines (ATM) (www.ubagroup.com/group/ourachieve).
1.9.3 Union Bank of Nigeria Plc
Union Bank of Nigeria Plc was established in 1917 as a Colonial bank with its first branch in Lagos. In 1925, Barclays Bank acquired the Colonial Bank, which resulted in the change of the Bank’s name to Barclays Bank (Dominion, Colonial and Overseas). Following the enactment of the Companies Act 1968 and the legal requirement for all foreign subsidiaries to be incorporated locally, Barclays Bank (DCO) in 1969 was incorporated as Barclays Bank of Nigeria Limited. The ownership structure of Barclays Bank remained un-changed until 1971 when 8.33% of the Bank’s shares were offered to Nigerians. In the same year, the Bank was listed on the Nigerian Stock Exchange. As a result of the Nigerian Enterprises Promotion Act of 1972, the Federal Government of Nigeria acquired 51.67% of the Bank’s shares, which left Barclays Bank Plc, London with only 40%. By the enactment of the 1972 and 1977 Nigerian Enterprises Promotion Acts, Barclays Bank International disposed its shareholding to Nigerians in 1979. To reflect the new ownership structure and in compliance with the Companies and Allied Matters Act of 1990, it assumed the name Union Bank of Nigeria Plc (Project Light-up Nigeria, 2011).
In line with the federal government policy on privatization and commercialization, the federal government in 1993 divested by selling its controlling shares (51.67%) to private investors who are Nigerian citizens and organizations all within the private sector. (www.unionbankng.com/index.php/about-us/history) Furthermore, in line with the Central Bank of Nigeria’s banking sector consolidation policy, Union Bank of Nigeria Plc acquired the former Universal Trust Bank Plc and Broad Bank Limited and absorbed its erstwhile subsidiary Union Merchant Bank Limited. The Bank also increased its shareholders’ funds through a Public Offer/Rights Issue in the last quarter of 2005. With these developments, Union Bank remains one of the most capitalized banks in Nigeria. It has a shareholder’s funds of N102.542 billion and operates through 386 networks of branches that are well
spread across the country, all of which are on-line, real time. The bank is still growing stronger and as at 29th October 2008, the bank declared a full year gross earnings of N112.99 billion for the financial year ending March 31, 2008 and the board of directors are proposing a 1 for 6 bonus share for all shareholders with a N1.00 dividend payout (Union Bank of Nigeria Plc, 2014).
In 2009, the Central Bank of Nigeria (CBN) intervened in the management of the bank with an interim management team to stabilize and recapitalize the bank. Full recapitalization was achieved in 2011 with the injection of US$500 million into the bank by Union Global Partners Limited (UGPL) after the Asset Management Company of Nigeria (AMCON) had provided capital in the sum of N46.93 billion to bring the bank’s net assets value to zero. The bank is currently owned by UGPL (65%), AMCON (25%), and a diverse group of shareholders that account for the balance (15%) (Union Bank of Nigeria Plc, 2014).
1.9.4 Zenith Bank of Nigeria Plc
Zenith Bank of Nigeria Plc is one of the most capitalized company on the Nigerian Stock Exchange (NSE), with a market capitalization of N612.82 billion as at end – June 2007 and the biggest bank in Nigeria in terms of total assets plus contingents which stood at N1,
178.39 billion as at June, 2007. The bank was established in May 1990 and started operations in July same year as a commercial bank. It became a public limited company on June 17, 2004 and was listed on the Nigerian Stock Exchange on October 21, 2004 following a highly successful initial public offering (IPO), which recorded a subscription level of 554%. The bank presently has shareholder base of above one million, an indication of the wide acceptability of the Zenith brand (Zenith Bank of Nigeria Plc, 2009). Its head office is located at 87, Ajose Street, Victoria Island, Lagos, Nigeria. With over two hundred and fifty (250) branches and business offices nationwide connected online, real time, Zenith Bank has presence in all the state capitals, the Federal Capital Territory (FC and numerous towns and cities) (Zenith Bank of Nigeria Plc, 2014).
With about five hundred (500) branches and business offices connected online-real time, the Zenith franchise covers all the state capitals, the Federal Territory (FCT), and major towns and cities in Nigeria. The bank’s wide area network facility is efficiently deployed and
seamlessly integrated through a related communication company. The bank’s business location strategy and infrastructure deployment reflect its commitment to customer enthusiasm at all times in all business offices nationwide. The same unique brand of financial services awaits customers in each location. Zenith Bank remains committed to being a leading light in the deployment and utilization of Information and Communications Technology (ICT) for financial services delivery, with its service offering covering, but not limited to; Corporate and Commercial Banking Services; E-business Solutions including local and international card business; Treasury and Cash Management Services; Foreign Exchange and Trade Finance Services; Funds/Assets Management; Private Banking; Investment Banking and Financial Advisory Services (The Nation, 2007).
In 2009, Zenith bank was one of the 14 banks that passed the special audit conducted by the CBN to ascertain the stability of the banking sector in the country. Zenith’s capital plan is linked to its business expansion strategy which anticipates the need for growth and expansion in its branch network and IT infrastructure. The capital plan sufficiently meets regulatory requirements as well as provides adequate cover for the group’s risk profile. Its capital adequacy remains strong and the capacity to generate and retain reserves continues to grow. The operating results of the bank, since it went public in 2004, indicate an impressive performance in all of its parameters. Total assets grew from US$1.25bn in 2004 to US$14.19bn in Q3 2011, representing a growth of 1,039 percent. Within the same period, total deposits went up by 1,079 percent from US$845m to US$9.97bn, as at September
2011 (World Finance, 2012).
1.10 OPERATIONAL DEFINITION OF KEY TERMS
Commercial Bank: This is defined as a depository institution that accepts deposits from both personal and corporate customers and the funds are used to create loans which are lent to eligible borrowers at a profit.
Commercial Banking Industry: This is defined as a group of Commercial Banks.
Cultural Integration: This is the process of establishing a new company model by selecting, absorbing, and integrating cultures.
Economic Integration: This is defined as the unification of economic policies between different states through the partial or full abolition of tariff and non-tariff restrictions on trade taking place among them prior to their integration.
Globalization: This is defined as the international integration of goods and services, technology, labour and capital that makes firms to implement global strategies which link and coordinate their international activities in a worldwide basis.
Industrial Peace: This is a state in industrial relations in which both employer and employees abstain from industrial action (such as strikes and lockouts), given a state of industrial harmony and tranquility.
Industrial Relations: This is defined as the relationship that emerges out of the day to day working and association of employers and their associations, unions and their workers and government and its agencies in the course of running an industry or business.
International Business: Is defined as ventures that aim at profit by operating in more than one country.
International Trade: This is defined as the activity of buying and selling or the exchange of goods and services between nations on a worldwide basis.
Political Integration: This is defined as the assimilation of international organizations that influences the relationships among nations.
Trade Liberalization: This is defined as the removal or reduction of restrictions or barriers on the free exchange of goods and services between nations. .
This material content is developed to serve as a GUIDE for students to conduct academic research
EFFECT OF GLOBALIZATION ON INDUSTRIAL RELATIONS IN THE NIGERIAN BANKING INDUSTRY
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