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The increasing competition in the Nigerian banking industry necessitates the banks take on higher degree of risks than they are hitherto accustomed to but  the degree of risk inherent in a bank”s lending  portfolio has serious implication for the banks earning and  earning asset, subsequently for its liquidity, profitability and capital. The problem with which this study was concerned is that of identifying the causes of bad debt in commercial banks using union bank Nigeria Plc as a case study affect the factors such as: Economic recession, non- prudent financial management, natural disaster,  prevailing economic situations on debt management were considered. The objective of the work was to study the process of credit appraisal, identify the major causes of bad and doubtful debts, analyze their effect and offer suggestions on minimization and the effective management of bad debts in commercial banks. The study population was, N32 officers from the credit department of the bank from ten branch officers. The instrument used for data collection was the questionnaire at Abakaliki in Ebonyi State of Nigeria. the sample size, n28, was determined by systematic random sampling. the data collected were analyzed, tabulated and presented, using average and simple percentages and conclusions were drawn with the aid of statistical sampling of the response of the respondents. As the result of the analysis of data, the research study discovered that factors such as economic recession, Government monitory  policy, excess gearing, under capitalization etc, could cause bad debts in banks. The implication of these findings for debt management in commercial banks are numerous. It implies that the economy, staff qualifications, prudent financial management and establishment of effective loan policy have a significant effect on the incidence of bad debt. Key Words: Debt Management, Problems, Prospects.





Commercial banking activities started when an expatriate shipping company based in Liverpool, England known as elder dumpster and company limited invited African banking corporation {ABC} of south Africa to e establish a branch of it bank in Lagos in 1892 in order to enhance trading activities of companies. Later in 1894 another bank was registered by elder Danyster company limited under name bank of British west Africa {BBWA}which open its first branch in Lagos that year.

Later in 1899, the Anylo-African bank was establish by royal Nigeria company {Now UAC of Nigeria PLC}.In order to break the complete monopoly of the Nigeria since by BBWA in 1912, the bank was sold out to BBWA since could not be a monopoly.

Subsequently, in 1949 another expatriate bank known as the British and French {Now united of Africa PLC} was established.

Moreover, between 1994 and 2003, not more than banks in the country close shop due to insolvency. The failed banks had certain thing in common under capitalization and unethical sharp practices presently the dominant banks in Nigeria are the indigenous banks, while there are few with foreign interest but are incorporated.

The rate of growth banking industry in Nigeria today as well as it expansion and survival depends on efficient on their dealings with customers give them the confident that they are operating, investing or banking with a reliable. It will also affect the performance of the industry positively.

Generally, debt managements is a professional system of managing the investments of banks in order to avoid debt and recognize losses arising from exposures and income thereof, to the extent that debt management will greatly affect the improvement and performance of commercial banks, since the aim is to reduce the effect of debt by regulating how interest on loans and advances and other risk should be recognized and disclosed in the financial statement.

According to Adams{2006} debt management represent action of the government or the investing bank to influence the composition of debt. debt can be managed in the following ways;

(1)       Economic restricting programmed.

(2)       Debt repudiation.

(3)       Debt equity SWAP or debt conversion     program me, which was introduced in July 1988.

Furthermore, in order to reduce the liquidation and bankruptcy of commercial banks for debt management, commercial provide financial services and intermarries to the various segments of economy. As part of the services rendered, they are coming between surplus economic units and deficit economic units.


The case study used in this research, debt management of commercial bank in Nigerian problems and prospects, is union bank of Nigeria plc. Union bank of Nigerian plc was establish in 1917 as colonial with its first branch in Lagos. In 1925, Barclays  bank  acquire the colonial bank, which resulted in the change of the banks name to Barclays bank (Dominion, Colonial and overseas).

In 1969, the bank was incorporated as Barclays bank of Nigerian limited. The ownership structure of Barclays bank remained un-changed until 1971 when 8.33% of the banks share were offered to Nigerians. In the same year, the bank was listed on the Nigeria stock exchange. As a result of the Nigeria enterprises promotion Act of 1972, the federal government of Nigeria acquired 51.67% of the banks  share, which lift Barclays bank plc, London with only 40%. By the enactment of the 1972 and 1977 Nigeria enterprises promotion Acts, Barclays bank international disposed its shareholding to Nigerians on 1979. To reflect the new ownership structure and compliance with the companies and Allied matters Act of 1990, it assumed the name union bank of Nigeria plc.

In consonance with the governments program me of privatization commercialization of public enterprises, the government in 1993 sold its shares  in union bank, and it become fully owned by Nigeria citizens and organizations. The bank also increased its shareholders funds through a public offer/rights issue in the last quarter of 2005. Union bank has 379 branches across the country, all o which are on-line real time. With the development, union bank remains one the capitalized banks in Nigeria. As at December, 2015 union banks has a shareholder fund of #1,19,160 billion and operation through 405 network of branches that are well spread across the country. The union bank of Nigeria has some subsidiaries and associated companies which are listed below.


-Union home, saving and loans plc.

-Union trustees limited.

-Union assurance company limited.

-Banque International and bennine cotonou.

-UTL Communication service limited.

-Union capital market limited.

-Union registers.

Associated Companies

-Consolidated discount ltd.

-HFC Bank Ghana ltd.

-Unique venture capital management company ltd.

Union bank group operate an internal locking organizational structure whereby some board members of the union bank of Nigeria plc act as external auditors in the subsidiaries and associated companies. This arrangement ensures affective oversight and participation in the decision making process of these companies thereby state guarding banks investment.  Today, the bank is a leading regional bank in sub-share Africa in terms of its difference investment across the global, as the banks financial summary reveals it solvency.  On 30th September, 2016 the bank gross earning was #193.44 billion, profit before task stood at #13.28 billion and profit after task stood at #13.01 billion and on 26th September, 2016 the total assets was #1095.4998.1 billion till 2017.

The bank management is headed by Mrs Funke Osibodu as the group managing director and the chief executive officer is Mr Emeka Emuwa.


The broad objective of this study is to examine the debt management, the problems and prospects of Commercial banks in Nigeria. However, the following specific objectives would be achieved;

  1. To identify and appraise the lending procedure of banks using union bank of Nigerian plc as a case study with as view to highlighting the effectiveness and adequacy or otherwise the credit management policy of Nigerian banks in reducing the occurrence and consequences of bad debt.
  2. To find out the rate and which inadequate collateral security provision by borrowers increasing the incidences of bad debt in Nigeria banks.

iii. To identify whether fund diversion has any effect on bad debt  commercial bank in Nigerian.

  1. To examine the extent to which government intervention in lending policies of commercial banks has influenced bad debts in Nigerian commercial banks.
  2. To find out the extent to which improper project evaluation influence bad of commercial banks in Nigeria.


By answering the following questions, the objectives of the study would be achieved.

  1. What is the lending procedures and credit management policy of commercial bank in Nigeria?
  2. What are the provision for collateral security to loan granted to customers by commercial banks?

iii. To what extent does fund division have any effect on bad debt of union bank PLC?

  1. To what extent has government intervention in lending policies of commercial bank influenced bad debt in union Bank PLC?
  2. To what extent does improper project evaluation influenced bad debt of union bank of Nigeria PLC?


The study will centre on the management of bad and doubtful debts in union bank Nigeria PLC. Loans and advanced department of the bank were studied. The research will cover the identification, possible avoidance, minimization and management of bad and doubtful debts in the bank.

It is expected that the result from the study will also be useful and relevant to other commercial banks in the country, since they are all in the same financial market and face similar problems.


Based on the findings of some researchers on the debt management of commercial banks in Nigeria. problems and prospects”. These assumptions are made to guide the researcher in the following that;

  1. It was assumed that union bank PLC in accordance with generally accepted according principle (GAAP) and the statement of accounting standards (SAS) just like other ventures.
  2. It was also assumed that the result generated from the union bank PLC organization could be generalized to other companies in the industry.

iii. it was also assumed that the result of the study will be up to date and concise.


The study is about the debt management of commercial banks in Nigeria: problems and prospects.

The significance of this study to management of commercial banks will enable them to appreciate an appraisal of their lending and control mechanism now that they are expected to lend under tight monetary conditions. The economy as a whole will benefit from  the study  because if the level of bad debts is reduced, banks will be left with more profit to enable them make expected contributions to  the development of the economy. The study will also add to our understanding of how Nigerian commercial banks grant their credits.

The significance of the study to government face policy choice concerning debt management objectives it preferred risk tolerance, when part of the government statement of financial position those managing debt should be responsible for, how to manage contingent liabilities and how to establish sound government for public debt management. these include; recognition of the benefits of clear objectives for separation and coordination of debt and monetary management objective and accountabilities.

Hence the significance of his study to students this study could be of immense help to students of Accounting or Banking and fiancé to equip them when they go into the field of the course they read.


DEBT:-This is described for as an obligation to make future payment, it is credit received by a borrower from a pure lender who may be a formal or informal institution against  the borrower’s promise to make future payment. Ike (2004).

MANAGEMENT:- According to Onyemesim (2009) management is the coordination  of all the resources of an organization through the process of planning, organizing, directing and continuous in order to attain organization objectives.

PROBLEM:- These means difficulties to deal with, it also means a question to be answered or solved.

PROSPECTS:- According to Orjih (2011) prospects is a legal document given to every investor who contemplates purchasing registered securities in an offering it describes the details of the company and the particular offering.

COMMERCIAL BANK:- According to Steven (2003;P.511) commercial bank is regard to as a bank or a division of a bank that mostly deals with deposit and loans from corporation on large business, as opposed to normal individual member of the public.

DEFICIT ECONOMIC UNITS:- According to Ibiam (2016) deficit economic units is any individual, group or entity (such as a broker or dealer) obtain its funds surplus economics units by way of the financial markets.

SRUPLUS ECONOMIC UNIT:- According to Ibiam (2016) surplus economic unit is an economic unit with income that is greater than or equal to expenditures on consumption or real investment over the course of a period.

DEBT REPUDIATION:- According to Anonymous (2005) Debt equity swap is an arrangement used for solving debt problem. it involves the internalizing for foreign debts and the bound holders exchange their instruments for equity holing.

DEBT CONVERSION:- According to Ihimohu (2008:   P.194) Debt conversion in a broad sense is the exchange of monetary instrument for tangible assets conversion financial instrument. In Nigeria, the debt conversion exercise involves the sale of an external debt instrument for a domestic debt or equity participation in domestic enterprises.

DOMESTIC DEBT:- According to Ihimohu (2008:P.183) Domestic debt is a debt incurred by the government through borrowing from its citizens in domestic market in order to finance investments.




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