CHAPTER ONE
 INTRODUCTION
1.1 BACKGROUND TO THE STUDY    
The practice of modern banking in Nigeria dates back to 1892. The pioneer banks were understandably expatriate institutions set up to facilitate the colonial administration as well as trade with Britain.     The first bank was set up in 1892 and it was called the African Banking Corporation which opened the first branch in Lagos and this was Championed by Elder Dempster and co; a shipping firm based in Liverpool but had it branches in Lagos in 1894 another bank called the British Bank for British West Africa. The bank acted as an agent of the bank received, stored and issued the west Africa silver coins in exchange for sterling coins or London drafts. This bank later changed its name to standard bank.     In 1899, the Anglo-African bank was established in compete with the British bank of West Africa. The bank was established in old Calabar but because of the monopoly enjoyed by the British Bank of West Africa for the importation of silver from the royal mint in Britain, the Anglo African bank sold after it, changed its name to bank of Nigeria to BBWA. Another bank opened in 1917 called the Barclays bank DCO (Dominion Colonial and Overseas). Between 1894-1933, the British bank of west African and Barclays bank DCO dominated the banking scene. Another bank joined the banking scene in 1949. This bank was called the British and French bank. The bank became the third expatriate bank to dominate early Nigerian banking scene.     The banks at this period were principally these expatriate banks, which were principally to render services in connection with international trade. So their relations at that time was chiefly with expatriate trading companies and with the government. These banks also controlled 90% of aggregate bank deposits. They largely ignored the development of local African entrepreneurship.    
   It should be noted that these various expatriate banks changed their names. The British bank of West African changed its name to standard bank and its presently called 1st bank of Nigeria plc. The Barclays bank DCO changed its name to union bank plc. The British and French bank also changed its name to united bank for Africa Ltd (UBA). However, Nigerians did not take active part in banking ownership until 1930s.    
 In an attempt to create a competitive environment with the expatriate  banks, the first indigenous bank was established in 1929. The bank was the industrial and commercial bank. This bank was setup by patriotic Nigerians, but failed in 1930, in 1931, another indigenous bank was established and was called the Nigerian merchantile bank but liquidated in 1936 due to the same reasons like the industrial and commercial bank. The first indigenous bank to survive was established in 1933, called the national bank of Nigeria ltd. Other banks established include: the Agbonmagbe bank; a private indigenous bank founded by chief Okupe in 1945. However, the bank was taken over by the western government in 1969 and its name later changed to WEMA bank plc till date. Also established was the Nigerian penny bank in early 1940s but failed in 1946; the Nigerian farmers and commercial bank in 1947 but failed in 1953 and the merchants banks in 1952 but failed in  1960.     Despite the fact that up to 185 banks were established between 1947 and 1952, only four(4) banks survived. These banks include: the National bank of Nigeria established in 1933; Agbonmagbe bank established in 1945 now WEMA bank; the African continental bank established in 1947; an expatriate bank. The British and French bank now united bank for Africa established in 1949 (G.O Nwankwo, 1980). However, this period of banking can be termed free for all because banking activities were unregulated. A committee called the patrons committee was constituted to look into the causes of bank failures. The report of this committee revealed the following; most banks were faced with under capitalization, poor and inexperienced management and competitive pressures from the well established foreign banks.    
In 1952, the 1st indigenous ordinance was made.this ushered in the era of formal banking practice in Nigeria. it established standards before license is granted to operated banks. This was applicable immediately on new banks and a period of three years was given to all existing banks survived, they include; Agbonmagbe bank, African continental banks, national bank and merchantile bank. The ordinance was later replaced with 1st indigenous banking act of 1959, and has undergone series of amendments in 1972, 1975, 1979 and was fully consolidated by 1990 company and allied matters decree and currently called banks and other financial institution decree of 1991 (BOFID).