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The role of financial institution is to transfer savings from surplus economic unit to deficit economic unit who will utilize the savings in generating investment. The savings surplus economic unit would in the process have earned income in the form of  interest on those funds that wouild have been lying idle, while the saving deficit economic unit would have been in the process of earn profit from the investment  attempts.  Attempt would now be made in briefly tigate some financial institutions. In terminology, the difference and relationship among four basis concepts which will be used  frequently in the discussion must first be explained. These are  the financial system, financial system,financial market, financial instrument, rules, conventions and norms that facilitate and regulate the flow of fund s through the macro-economy. The system is controlled by the government through agency of the central bank of which supervise  the activities of financial intermediaries and monitors adherence to  the government monitory and ficial- policies the major types of financial intermediarie are commercial banks, merchant bank, Development financial institution insurance companies, credit and saving institution, investment  trust and mortgage institution. Financial market on the others hand, are simply the various facilities provided by the financial system for the creation of custodianship and distribution of financial assets  and liabilities and the market is divided into two major segment, we have the money market and capital market.





Financial institution occupy a vital position and play a land role in the economy  of the nation.  Their major purposes are proper mobilization of fund as well as provision of capital for industrial development which is aimed at enhancing economic- growth and development in the early year off banking operation in Nigeria, bank performed their intermediary functious by giving loan mainly on individual basic (ie separately) but as   the country  entered the threshold of development and more investment opportunities opened up, industrialist started demanding  large sum of money which is provide by bank on medium or long  term basis. However, baking is a highly regulated industry the world over with restrictive monetary and credit guideline in long  growth and reserve requirement, sector  of the economy and excess liquidity mop up through the assurance of stabilation securities to the bank to mention few due to these restrictions, it is difficult for a bank to meet up with the huge loan demanded for customers.  Also, it is well known that lending is not a risk free and that bank prefer to spread their risk with others in the banking industry.

Against this background, banks came to get her performing what is known  as consortium to advance funds is called loan  syndication and is sometimes called “consortum” lending can be define as the agreement  between  two or more lending  institution to provide a borrower with credit facility  utilizing common loan documentation. Loan syndication is now being practiced in Nigeria starting from 1960’s when a constrium of commercial banks and acceptance houses discounted trade bills for marketing boards under the produced bills finance scheme formalized loan syndication came into beig during the oil boom of the jobs when there was need for adequate capital of finance, the industrialization programmes.  During this period, few merchant banks had been incorporated.

Loan syndication has assumed international dimension because it need to provide adequate capital to finance the fast growing of the world economical international syndicated credit is managed and underwritten by one or more finance institution  normally from a location other than the domicile of the borrower lenders fromm different countries could provide the borrower with access from their  countries or to move than its own currency from other contracts of domide.


To investigate why loan   syndication is not properly managed given priority attention by monetary authorities Despite strategic place in financing viable project capable of injecting foreign currency creating employment and facilities acting rapid economic development.

I) To examine critically the place of financial institution in the management   of loan syndication in the economy. Loan syndication is a child of circumstance airing from legal lending restrictions, risk- sharing and liquidity problem.


The research would like to know the despite these constrains- prevailing it is still a supplementary option for business financing?


For an economy to develop, there must be a supplementary source of finance viable investment projects beyond the limits of an individual financial institution it is on this basis that would like to identify those fundamental problems confronting loan syndication and suggest how much problems can be solve.

To ascertain the effect of loan syndication in economic- development.

To highlight the potential of loan syndication in the economy.

To recommend that syndication loan is noted different from other loan rather, it is subjected to conditionalist attracts, high interest rates, subject to default and time lapses in packaging as a result of bureaucracy involved  by consortium Banks.


This study is expected to provide useful information on loan syndication to the following

STUDENTS:- the student by the use of this project make researcher and source information  on the role of financial institution in the management of loan syndication.

FINANCIAL INSTITUTION:- financial  institution via this projects will  learn how to keep to their loan syndication agreements.  It will also encourage the financial institution to give financial accommodation through loan syndication because it is   more beneficial to them  financial institution will also learn how to reduce the time frames in packaging a syndicated loan.

BORROWER: – the borrower, with the aid of this project will know the appropriate- procedures involved in-obtaining loan through syndication.  Since loan syndication contributes immensely to the development of our economy   both the government the targeted audience will benefit from this project know more about the benefit of loan syndication in our economy.

PROFILE OF LOAN SYNDICATION BENEFICIARIES FLOBE AGRO-VENTURES LTD:-  this is an agricultural division of Bhojoson industrial LTD which engage in large scale commercial and industrial activities and employs  about 4000 staffs in its effort to support the economy from agricultural sector.  The purpose of the syndicated  loan facility was to part finance the cost of farm  andland development and the acquisition of machinery for cotton and farming project in forme Gongola and Niger state   Nnamdi-Azikiwe stadium management corporation.  This federal government corporation was formally managed by the former Anambra state sports council.  The sports council in October 1980 applied for a N10m loan for the completion of first phase of the sports stadium which    comprise the main Bowl with estimated sitting capacity of 50,000 persons, tartan track, field dranje electrical and mechanical equipment and installation turnstile and ticket machines electronic score board-building and vehicle, estimated- labour requirement was put at 79 and total annual gross revenue generation on put at   N 627, 000 in the first year of putting the stadium to use (1982 to N1534,000 in 1987 and subsequent year.

UNION AUTHOPARTS, MANUFACTURING COMPANY LIMITED: -This is wholly owned Nigeria company situated at Nnewi, the company manufactures completely charged motor and motor-cycle  – Batteries  of sizes 45AH,60AH, 135AH and 150AH other auto spare parts and accessories the company manufactures are auto-lamps, front and rear height cores, fan-brakes, front trickles, wheel covers, reflectors, brakes pads and liming clutch fitting   and other plastic products.  The compny Obtained loan of N30m in 1987 from the corporative and commercial Bank- limited and African continental Bank  limited to complete the factory building and procedure    and install the plant the security for the loan was secured on landed property of a member of the union auto- company the project was completed in 1990  and production stared the  same year  presently,   the company operates between 80%-90% of installed capacity of one  thousand- batteries of different sizes per day.  Producing between 750 and 900 batteries per day.  The company has an excess demand of its product particularly the batteries by December 1992  the company liquidated syndicated loan include interest accused.

AKWA IBOM STATE GOVERNMENT:-  the  state government is one of the Nigeria largest 20for oil and natural gas production. The state has greatest agricultural resources and is blessed with favourable climate and abundance of rich fertile soil for agriculture. The state   has potential wide variety        of good and cash crops for use local industries as well as for export it’s way or agricultural products are as follows:-

FOOD CROPS: – Rice, Cassava, Yam, Cocoa yam, Cocoa, Plantain, Banana, and Maize

CASH CROPS: – Rubber, Palm oil, Raffia palm, Palm kernel, Cocoa, Coffee, Coconut and Citrus fruits.

Infact, Akwa ibom is one of the leading state in the production of oil palm product in Nigeria in 1989 Akwa Ibom states government applied to obtained a syndicated loan ofN12m from the bank led by Nigeria such Wema bank limited.


Adjusted Capital:   It is the paid – up-capital plus statutory      reserve of Banks

Commitment fee:   This is a fee paid to lender form formal line             of credit

Default: This is referred to the failure to pay interest and or principal at maturity

Financial intermediation:  financial intermediation brings savings units together with saving deficit units so that savings can be re-distributed of their most productive use

Financial market:  This is an arrangement or a place in which the creation and transfer of financial assets and financial- liabilities takes place

Load/Agent Bank:  It could be the original (banks of syndicating it.  The first bank the borrower consulted or the bank that contribute the interest amount of financing of the loan.  It oversees the procedures sand activities of such borrower and passes information to other  participating- Banks.   The lead bank  can also be known as the big- bank.

Inter – Bank- agreement:-  This is the document the at spells out common – agreement binding all the participating – Banks.

Loan- agreement:-  This  is the document that calumets the borrower and  the participating lenders to terms and conditions of the loan .

Loan syndication:-  It is an arrangement between two or more ending institution – provide a Borrower with credit facility vacating common- loan  to documentation

Offer/commitment:-  The letter spells out the terms and conditions governing the credit while former is the offer for an acceptance

Participating Banks:- They are Banks involved in- particular loan syndication.

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