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History of Commercial Banks in Nigeria

Commercial banks have over the years served as the mainstay for the provision of financial services to Nigerians even though they are under the watch of the Central Bank of Nigeria. And in fact, the role they played in the development of Nigeria’s economy can never be underestimated.

But what is the history of commercial banks in Nigeria? What actually led to their development? The need to give answers to those questions gave birth to this article and to find them, just read the article. Enjoy the read.

Brief History of Commercial Banks in Nigeria

Commercial banks in Nigeria got a history as they are actually established as a result of the need to participate in commercial banking. In fact, commercial banking started in Nigeria before independence. Do you see how old the banking system is?

Commercial banking started in Nigeria in 172 with the establishment of the African Banking Corporation. Then, the bank is endowed with the responsibility of distributing Bank of England notes to the British Treasury.

Later, in 1894, the Bank of British West Africa, now called The First Bank of Nigeria was established in Nigeria after which the Union Bank of Nigeria (UBA) formerly called the Barclays Bank was also established.

History Of Commercial Banks In Nigeria
History Of Commercial Banks In Nigeria

You know at that time, Nigeria is still battling with the development of its economic system. So, the banks were created to provide financial and other banking services for the Colonial administration and also the British Commercial Interests.


The two administrations continue to enjoy the monopoly until 1933 when the National bank of Nigeria came into existence and as such became the first indigenous bank. Actually, the bank became the first indigenous bank because it was able to survive as two indigenous banks: Indigenous Banks Industrial and Commercial bank and the Nigerian Mercantile Bank that were already established did not survive because they collapsed.

Between 1945 and the present time, the indigenous commercial banking system has undergone a period of turbulence, especially in the last 1950s and 1960s with most of them moving out of the business as a result of insufficient funds, lack of management, patronage, and many more. Some of these banks include Merchant Bank Limited, Nigerian Farmers, and Commercial bank, etc.

  • Governmental Intervention

As time goes on and the collapse of more banks goes with it, the early Federal Government saw the need to intervene in the commercial banking sector by the infusion of capital into the National Bank, Agbonmagbe Bank, and African Continental Bank. Rumors have it that the intervention was a result of the effort of businessmen with strong political influence to ensure that the banking sector was revived.

The objective of the government in providing assistance to the banks as inscribed in the statements of the two sponsoring State Governments: East and West Regional Governments include

  1. To discourage the monopoly of monetary transactions by the two established expatriate banks
  2. To liberalize credit facilities for Nigerian entrepreneurs

History has it that the Governmental intervention actually resulted in the survival of the banks by giving the banks a new dimension of management. The lending policy of these banks showed respondent bias in favor of loans to those close to the corridors of powers,  often without any adequate securities.

So, in the end, the growth and development of commercial banks experienced occasional setbacks that had to be countered by the infusion of more funds, restructuring of the Boards, and streamlining of management.

Other state-owned banks like New Nigerian Bank, Pan African Bank, Progress Bank, Lobi Bank, Owena Bank, Bank of North, etc. later came into existence to join the list of the three indigenous banks which had actually survived the test.

However, in the meantime, the Federal Government has continued to be extending its participating interest in business enterprises into the banking sector. Later, the Government acquired a sixty percent interest in all the established expatriate commercial and merchant banks in the country following the promulgation of the indigenization Decrees of 1972 and that of 1977.


On a clear ground, the main aim of the government in intervening in the banking sector most especially the commercial banking as stated in the 1973/74 budget was expressed as thus

“The aim of the Federal Government in commercial banking activities so as to guide them to operate to the maximum benefit of the economy. This is as much in their own interest, as it is in the interest of the country.”

Role of Commercial Bank in Nigeria

The role of the commercial bank is broadly classified into two

  1. Money Generating Role
  2. Service Rendering Role

Out of the two, the money-generating role is the most important as it forms a cornerstone in Nigerian economic development. This usually does not only involves the raising of funds or collection and pooling of bank deposits but also the provision of credit to the various sector of Nigeria’s economy.

The Service Rendering Role includes the following but is not limited to

  1. The opening and management of accounts for customers- this may be a current account, savings or deposit accounts
  2. The provision of facilities for domestic and foreign remittances for their customers e.g. the provision of ordinary cheques and foreign currency
  3. The collection and settlement of National and International debts resulting from domestic and external trade for their customers, including the provision of letters of credit
  4. The provision of Facilities for their customers for the safekeeping of their money and for the safe custody of their valued materials
  5. Undertaking feasibility studies and provision of financial and Investment counsel and other corporate assistance to their customers and
  6. The undertaking of Trust and Administration of Estates in term of their deceased or unhealthy customers.

Examples of Commercial Banks are First Bank of Nigeria Plc, Zenith Bank Plc, UBA, Guaranty Trust Bank, Ecobank, Access Bank, Diamond Bank, Skye Bank, FCMB, Fidelity Bank, Sterling Bank, Union Bank, etc.


Conclusion On The Brief History of Commercial Banks in Nigeria

The role of the commercial bank in the development of developing countries like Nigeria can never be overestimated as they help in ensuring the proper circulation of money for the citizens.

And there you have it, the history of commercial banks in Nigeria.