JAMB - Economics (2011 - No. 16)

Bank consolidation is the process by which one banking company takes over or merges with another. This leads to a potential expansion for the merging bank. It is usually done to maintain and reach the required capital base as instituted by the central bank.

A bank's capital base is the "cushion" for potential losses, that protects the bank's depositors and other lenders. It is the required amount set aside in assets to mitigate against losses.