Mergers and Acquisition has been described as a viable too for capital increase in businesses. The Nigerian business environment is not distant from this opinion as several mergers have been successfully conducted to date. Specifically, the banking scene had witnessed many prior to the last recapitalization exercise. This paper investigates the relationship between increasing share capital of banks through merger and acquisition and liquidity and profitability. The study conducts empirical investigation into the merger of Intercontinental Merchant Bank Limited and Equity Bank Limited. The analysis is divided into pre and post merger periods to specifically capture the impacts created by the action. The study observes that liquidity is not significant in the relationship while profitability is very good in explaining the relationship. The paper concludes that profitability of banks is enhanced with capital increase, though not necessarily the liquidity level.