Construction project involves huge capital flow (materials, machines,
manpower, management, finance) from inception to completion and handover. Bank
consolidation will enhance synergy; improve efficiency through cost reduction revenue in
the long- run, reduction in the industry‟s risk by eliminating weak bank and acquiring of
smaller ones by the bigger and stronger bankers as well as creating opportunities for
greater diversification and financial intermediation. This paper aimed at assessing post
consolidation effect of the banking sector recapitalization on construction industry and
the major objectives of the study are: assessing the volume of credit facilities given to
building contractors by commercial banks the trend in the interest rates charged by
commercial banks on credit facilities allocated to building and civil engineering
contractors and to evaluate whether building and civil engineering contractors now have
better access to credit facilities. This research is purposive and 120 structured
questionnaire were distributed to the construction professionals, developer, financial
institution houses, and registered building and civil engineering contractors in some
selected firm in Lagos State and Ogun state out of which 92 questionnaire were retrieved
and analyzed. The result of the hypothesis showed that the level of construction activities
financed by banks has not increased during post-consolidation. The paper found out the
following as effects of banking sector recapitalization on construction industry which
resulted into the inability of the contractors to meet up the outrageous demands for high
value collateral to commemorate loan applied for, limited payback period on the loan
applied for, because the longer the payback period; the higher the interest rate and finally
high interest rate charged on the loan obtained by the contractors which are geometrically
increased from 3-30 percentage. The research work thereby recommend
Commercial banks need to pay more attention in financing medium and small size firm
and their projects as they constitute larger percentage of the Nigeria construction
industry, so as to increase their financial activities and expand their assets and recouping
capital.
Keywords: Recapitalization, Construction Industry, Consolidation, Banking.