Bank Mergers and acquisition

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The Long Run Performance of Asian Commercial Bank Mergers and Acquisition

The Long Run Performance of Asian Commercial Bank Mergers and Acquisition

While the Asian Financial Crisis happened from 1997 to 1999, this calamity raised fears of a worldwide eco- nomic meltdown. It also had significant macro-level effects in several Asian countries, including sharp reduc- tions in the values of currencies, stocks, and other assets. Local bank regulators encouraged or even forced banks to merger as a way to reduce bank failure risk and stress. After survived from the Asian Financial Crisis, Asia was considered to be the area with the highest growth overall. Figure 2 shows that the real domestic prod- uct growth rates in the EU, the US, China and Asia countries from 1980 to 2014. The GDP reflects an increase in the value of all the final goods and services produced within a nation in a given year; thus, it is a measure of economic development. It reveals that the real GDP growth rates in Asia were higher than the US and the EU between 1980 and 2010. Also, the trend is expected to continue in the future years, with the majority of the economic growth in the region fuelled by the rapidly expanding economies of China and India, together with significant growth in certain parts of South Asia, Southeast Asia, and especially East Asia.

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Bank Mergers and Shareholder Value Creation in India

Bank Mergers and Shareholder Value Creation in India

abnormal return. They earn a high cumulative abnormal return around the announcement days which is in line with the Hubris theory. The study provides evidence that shareholders of target banks must maximize their means during the announcement of mergers. In this period they act as "profit takers" because the value of their firms are very high (Hubris theory) and hence, they are capable to enjoy greater gains. Thus the implications are enormous for both foreign as well as local investors who make their decision based on current market values and expected risk-return tradeoffs that are associated with their investments. The study also documented that MM and CMM (Models) have performed in a similar way most of the times. This confirmation validates the findings of Brown and Warner (1985), who proposed that in case of short term analysis, the CMM and the MM give similar results. The future research may be directed to examine the effect of acquisition and takeover deals. One can broaden the scope of the study by examining the cross border merger announcements and other corporate actions. Even announcement impact of reverse mergers would make a great sense so as to have adequate evidence of stock price reaction and also market efficiency concerning Indian capital markets.

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Causal effect of mergers and acquisitions on EU bank productivity

Causal effect of mergers and acquisitions on EU bank productivity

Toumi et al. (2016) examine the dynamic effects of mergers and acquisitions (M&A) on the performance of credit institutions in the EU for the period 2005 to 2013. Their empirical findings reveal that time has negative effects on efficiency gains. However, the composite effects of dummy variables of mergers and acquisitions (M&A) over time gen- erated a positive effect on bank performance. In the case of the EU, Ayadi et al. (2013) analyse the effects of mergers and acquisitions (M&A) on productivity for the period 1996 to 2003. Their empirical results reveal a positive and significant effect of M&A on consolidating banks. Amewu and Alagidede (2018) examine the relation between the stockholder dividends and the announcement of mergers and acquisitions of Afri- can banks. Their empirical findings demonstrate a positive relationship between bank productivity and merger and acquisition (M&A) notification. In addition, Alarco (2018) examines the effect of merger and acquisition on production in Latin America for the period 1990–2014. Using an economic model with a production function, the study finds that mergers and acquisitions have the potential to create economic development in selected countries. In addition, bank mergers create added value with respect to the profitability of clients firms (Montgomery and Takahashi 2018). Montgomery and Taka- hashi’s findings demonstrate that client entities of Japanese banks involved in mega- mergers do not enjoy welfare growth.

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Impact of bank mergers on shareholders’ wealth

Impact of bank mergers on shareholders’ wealth

The findings establish that M&As impact on the shareholder value. Using the accounting based approach, banks that have undertaken M&As have exhibited posting better results than those that have not. In addition, banks that have undertaken M&As have been determined to have posted better results than the overall banking sector performance. The findings assert that the organizational factors such as relative sizes of merging partners, method of financing M&As and the number of bidders in M&As have the potential to influence the realization of a M&As success. The findings indicate the importance of considering the size of a potential target, the method to be used in financing M&As; whether to use cash or stock swap and the number of bidders bidding for the same target. Choice of method of financing is important because, “if a company takes on to finance M&As and the deal goes sour, it runs into financial trouble and the executives are replaced, but if an equity financed acquisition goes wrong, the stock price simply underperforms and nobody can be sure why” (Hitt et al., 2001). The findings note that the organizational factors acting independently have the potential to influence the shareholder value. This implies that the management of banks and other organizations intending to undertake M&As should seek to evaluate and consider how these organizational factors are likely to impact on the success of the intended M&As.

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Comparison of Value Creation through M&A in European Union

Comparison of Value Creation through M&A in European Union

The DataStream 5.1 database was used to identify European companies involved in mergers and acquisitions. This database allowed collecting information on transaction characteristics, merging companies and share prices of companies. The CIA World Fact Book, Eurostat, ECB, UNCTAD, Heritage Foundation and Geert Hofstede databases were used to collect information on the economies of countries. The totality of these sources formed the basis of the data used in the empirical study conducted in the research. The prices of shares of listed European Union companies engaged in mergers and acquisitions in 2004–2017 and their changes around the time of the announcement of the transaction formed the basis of the empirical study. The DataStream 5.1. database allowed identifying that there were 3 040 relevant transactions in 2004–2017, the total value of which was USD 1.394 trillion. Considering the problems encountered in the empirical study relating to obtaining daily share prices of companies, merger and acquisition transactions concluded by listed companies from Sweden, Germany and 13 European Union countries, which accessed the EU in 2004 and later, in 2004–2017, form the basis of the data used in the empirical study conducted in the research.

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IMPACT OF MERGERS AND ACQUISITION ON INDIAN BANKS: A STUDY ON MERGERS OF ICICI BANK AND BANK OF RAJASTHAN

IMPACT OF MERGERS AND ACQUISITION ON INDIAN BANKS: A STUDY ON MERGERS OF ICICI BANK AND BANK OF RAJASTHAN

The banking sector is one of the prominent indicators of the health of a country economy. Consolidation in the Banking industry is very important in terms of Mergers and Acquisitions for the growth of Banking Industry. This may be achieved through reduction of cost and increasing revenue. To be concluded that M & As of banking sector has an important role and global phenomenon in the development of banking industry. The study analyzed the profitability ratios, liquidity ratios and per share ratios of ICICI bank for the period of six years before merger and six years after merger. The statistical analysis of the financial performance of ICICI bank before and after merger can be concluded that there is a significant impact in net profit margin, current ratio and quick ratio. This is non – significant in respect of operating profit margin, gross profit margin, return on net worth, earning per share, dividend per share, operating profit per share. To be conclude that after merger the financial performance of the banks has increased. Limitation

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PECULIARITIES OF BANKRUPTCIES, RESTRUCTURING, MERGERS AND ACQUISITIONS IN LITHUANIA IN THE POST-CRISIS PERIOD

PECULIARITIES OF BANKRUPTCIES, RESTRUCTURING, MERGERS AND ACQUISITIONS IN LITHUANIA IN THE POST-CRISIS PERIOD

outperforming deals involving significant mergers and acquisitions” (Acharya et al., 2013). This means that specific knowledge of such specialists stimulates value creation. From the other point Fu et al. (2013) analyzed the acquisitions driven by stock overvaluation. Arkolakis & Ramanarayanan (2009) proved that the degree of vertical specialization varies with trade barriers. They found little dependence of business cycle synchronization on trade intensity and significant influence of imperfect competition. Branstetter (2006) has proved that FDI increases the flow of knowledge spillovers both from and to the investing firms. Brezis et al. (1993) found peculiar consequences of mergers and acquisitions on technological leadership, named as leapfrogging – “the new technology does not initially seem to be an improvement for leading nations, given their extensive experience with older technologies. Lagging nations have less experience; the new technique allows them to use their lower wages to enter the market. If the new technique proves more productive than the old, leapfrogging of leadership occurs”. Campbell et al. (2008) found interesting relationship between financial situations of the firms and their long term profitability – “Since 1981, financially distressed stocks have delivered anomalously low returns. They have lower returns but much higher standard deviations, market betas, and loadings on value and small- cap risk factors than stocks with low failure risk”. Chakrabarti & Mitchell (2013) mentioning the difficulty of distant mergers and acquisitions due the search cost increase with distance, particularly when search involves greater information processing, but that firms can partially overcome the constraints of distance.

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Internalisation Theory and outward direct investment by emerging market multinationals

Internalisation Theory and outward direct investment by emerging market multinationals

All multinationals respond to their domestic circumstances and therefore have different trajectories, sectoral make-up and motives based on this starting endowment. (Buckley et al. 2007) posit that Chinese firms have enjoyed privileged access to capital on preferential terms because of domestic capital market imperfections. Such imperfections originate from a number of sources, including soft budget constraints, an inefficient banking system, intrabusiness group cross- subsidization, and personal capital. (Shiria 2002) showed that larger, older, and less profitable Chinese firms in particular have received bank loans on attractive terms from Chinese state-owned banks. Preferential treatment and access to cheap money can spur Chinese firms to invest abroad, because abundant funding can (1) reduce the commercial and financial risks connected to overseas investment projects, (2) mitigate disadvantages of ‘‘home country embeddedness’’ and institutional distance (cf. Makino et al. 2002), and (3) enable the subsidization of potentially less profitable technology- and brand-seeking ventures, especially in industrialized countries, which might otherwise threaten the long-term survival of the investing firm. In the eclectic theory, the ability of firms to derive benefits from such capital market imperfections constitutes an ownership-specific (O) advantage, which may enable them to out-compete rival foreign firms (Dunning and Lundan 2008).

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Mergers: A Case Study of Forceful Merger of Global Trust Bank with Oriental Bank of Commerce

Mergers: A Case Study of Forceful Merger of Global Trust Bank with Oriental Bank of Commerce

Few mergers have taken there after mainly in the public sector primarily to protect the interest of depositors of weak private banks like early 1990’s Karur Central Bank in Kerala was merged with Bank of India, Hindustan commercial Bank faced the moratorium in 1988 and was merged with PNB, Bank of Tharur in Tamil Nadu in the late 1980s was later merged with Indian Bank, Nedungadi Bank in 2002, which was later merged with Punjab National Bank. However the Times Bank merger with HDFC Bank a few years back and bank of Madura with ICICI Bank portend a new wave of consolidation in the banking industry for mutual benefit. The merger in these cases sought to attain critical size. Another example of merger is merger of Global trust Bank. In a moratorium, government imposes a freeze on the bank’s liabilities so that bank is not able to grant any loan or advances, incur ay liability, make any investment or disburse any amount. The purpose of the paper is to examine the mergers and acquisitions in Indian Banking sector and know the rationale behind mergers. The paper is based on secondary data which is drawn from various journals and magazines, newspaper articles, websites, annual reports of banks and books.

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A REVIEW ON PRESENT BANKING SECTOR & ITS RECONSTRCTION IN INDIAN SCENARIO

A REVIEW ON PRESENT BANKING SECTOR & ITS RECONSTRCTION IN INDIAN SCENARIO

A short literature survey for every territory of research is accounted for in the previous areas. Researchers contrast on the factors taken and the procedure utilized alongside varying eras of studies. Concentrate on economies of scale is delicate to the definition(s) of bank output variable accepted. Utilized aggregate stores, advances and investment factors as a measure of bank output. In the present examination, intermediation way to deal with the definition of output is embraced. Hence, the measure of aggregate advances held toward the finish of a year is a measure of bank output since add up to progresses are final output of for banks. Add up to cost and additionally the individual cost thing is utilized to break down the economies of size of the banks. These cost things include compensation installments and arrangements to representatives, depreciation on banks settled resources, general costs and the interest cost.

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Mergers and Acquisitions in Banking Institutions with reference to State Bank of India

Mergers and Acquisitions in Banking Institutions with reference to State Bank of India

Mergers and Acquisition is a useful tool for the growth of banking business. There is no exception for the banking sector in India as well, which helps in the survival of the weak banks by merging into the strong bank. This study shows the impact of M&Ain the Indian Banking sector and SBI Bank with reference to recent merger of 5 banks have been taken for the study as sample to examine the as to whether the merger has led to a profitable situation or not. A comparison between pre and post-merger performance in terms of Operating Profit Margin, Net Profit Margin, Return on Assets, Return on Equity, earning per Share, Debt Equity Ratio, Dividend Pay-out Ratio and Market Share Price has been taken. In SBI there is no significant improvement in the performance after the merger as the merger was mainly in the interest of the public. In the initial stage, after merging, there may not be a significant improvement due to problems but later they may improve.

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MERGERS AND ACQUISITION OF FINANCIAL INSTITUTIONS IN NIGERIA: A CASE STUDY OF INSURANCE COMPANY

MERGERS AND ACQUISITION OF FINANCIAL INSTITUTIONS IN NIGERIA: A CASE STUDY OF INSURANCE COMPANY

Furthermore, there may be some situations when outright acquisition would be the best option. For instance, a Broker might consider having a stake in an insurance company where he places business. The Broker will be able to add its value to the insurance company by virtue of the expanded future business. The insurance company would naturally expect that the Broker would place higher proportion of its business with it than other potential purchasers. The Merger of Companies or the takeover of smaller Companies may well be a necessary development in order to aid the expansion of the company. It must be noted that the statutory minimum capital for insurance companies in Nigeria is well below the ideal level to establish a company and underwrite large risks. Insurance is an industry principally concerned with carrying risks. The acquisition of smaller Companies or Mergers between small Companies would go a long way towards improving this situation. Even larger companies benefit from increased capital resulting from Mergesr. Mergers should also lead to savings in administrative expenses and reinsurance cost. The regulatory authorities should set higher capital requirements for Insurance Companies and Mergers, and Acquisitions would be vehicles of this objectives.

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"The world merger and acquisition market: economic dimensions and specifics of regulation"

"The world merger and acquisition market: economic dimensions and specifics of regulation"

The rapid economic and technological changes occurring in the modern globalized world are causing substantial corporate reorganization. Companies strive to raise the efficiency of production processes and enter new sales mar- kets. A merger of companies is among the most adequate precondition for the successful adaptation to these changes. The term mergers and acquisitions (M&A) became one of the most widespread in economic literature during the past decade and ever more frequently evokes discussions in different circles of economists and politicians. Every day investment banks close transactions worth billions of dollars that determine the strategy of companies-participants for many years to come.

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A  Study on Mergers and Acquisition of Banks and a Case Study on SBI and its Associates

A Study on Mergers and Acquisition of Banks and a Case Study on SBI and its Associates

Since the early 1990s, the structure of the banking sector has significantly changed due to the deregulation and liberalization, accompanied by divestment of public sector banks, entry of foreign banks and merger of many banks in India and in the world. In the post reform period about 25 bank mergers took place in India. These mergers have important implication on the performance and profitability in the banking system. Therefore from the point of view of both managerial and policy interests, it is extremely important to know the impact of these merges on the efficiency levels of banks and their temporal behaviour so as to understand how the banking industry has been reacting to these emerging challenges and which banks are performing better than others in this period of transition.

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A Study of Merger, Acquisition and Bank Advisors

A Study of Merger, Acquisition and Bank Advisors

Whereas targets must receive some expectation of gain in order to win the approval of their target shareholders for any merger, those acquirer firm managers, who are free by pressure from value maximizing shareholders, may embark on acquisitions that offer no ex ante gain to stockholders. The managerial risk diversification hypothesispostulates that acquiring firm managers undertake (value reducing) mergers in order to reduce their diversifiable human capital investment in their firm. In a European context, Cybo-Ottone and Murgia (2000) show that diversifying mergers are value reducing, whereas focusing mergers are value enhancing. In the winner’s curse or hubris hypothesis, overly optimistic acquirers overbid for targets. For example, Roll (1986) shows that acquirers who overestimate the value of the target are more likely to successfully complete a merger, resulting in a decline in the acquirer’s value to stockholders.

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A Study of Merger, Acquisition and Bank Advisors

A Study of Merger, Acquisition and Bank Advisors

Whereas targets must receive some expectation of gain in order to win the approval of their target shareholders for any merger, those acquirer firm managers, who are free by pressure from value maximizing shareholders, may embark on acquisitions that offer no ex ante gain to stockholders. The managerial risk diversification hypothesispostulates that acquiring firm managers undertake (value reducing) mergers in order to reduce their diversifiable human capital investment in their firm. In a European context, Cybo-Ottone and Murgia (2000) show that diversifying mergers are value reducing, whereas focusing mergers are value enhancing. In the winner’s curse or hubris hypothesis, overly optimistic acquirers overbid for targets. For example, Roll (1986) shows that acquirers who overestimate the value of the target are more likely to successfully complete a merger, resulting in a decline in the acquirer’s value to stockholders.

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Effects of Mergers and Acquisitions on Acquired and Acquiring Business in the Food Delivery Industry: An Analysis

Effects of Mergers and Acquisitions on Acquired and Acquiring Business in the Food Delivery Industry: An Analysis

derived. The researcher can do the further study on how the mergers and acquisition affects their stakeholders. The future researchers can investigate other factors relating to the financial performance of the companies and also various other factors for mergers and acquisitions. The huge legal procedures for the mergers and acquisitions has to be minimized amounting to many mergers and acquisitions in the country. Since this food delivery industry is developing area many more mergers and acquisition will happen in future the researcher can study further into it and see how it affects the remaining companies in the industries. In order to standardize the use of its indigenous technologies into the acquired firm, the management should seek for creative new combinations of the acquiring and acquired firm. The researcher can make further analysis in food delivery industry of the other countries M&A that affects the growth of Indian industries.

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Trends in Mergers in Banking Sector in India: An Analysis

Trends in Mergers in Banking Sector in India: An Analysis

It is seen in table 4, that, in total twenty two mergers have taken place during the Post Liberalisation Period from 1991 to 2015. One interesting merger that took place was between two nationalised banks Punjab National Bank and New Bank of India the reason being high Non Performing Assets. Thirteen mergers have taken place between Public Sector Banks and Private Sector Banks; eight mergers have taken place amongst the Private Sector Banks. Out of these twenty two, twelve mergers were forced mergers because of the financial sickness of the banks; eight have taken place voluntarily; and two were in the lines of consolidation.

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Problems & Prospects of Mergers and Acquisition

Problems & Prospects of Mergers and Acquisition

This gives strength to the argument that Indian companies are focusing on their core areas and expanding mostly in related areas of strength which is helpful in realization of synergistic benefits. Further, it has been observed that M&As in India are strategic in nature that motives range from growth and expansion to high quality of human resources, strong brand presence and global identity and leadership. To remain ahead of competitors, business leaders need to have a global vision, be pro-active, able to take calculated risk and initiate and manage acquisition and consolidation process smoothly.

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FINANCIAL SYNERGY ON MERGERS AND ACQUISITION OF COMMERCIAL BANKS

FINANCIAL SYNERGY ON MERGERS AND ACQUISITION OF COMMERCIAL BANKS

Commercial banks are compose of financial management which plans, organize, direct and control the financial activities such as procurement and utilization of funds of the enterprise and the financial institutions. Thus, financial management entails planning for the future of a person or a business enterprise to ensure a positive cash flow which administer and maintain financial assets. Commercial banks that go through the process of mergers and acquisitions have the goal of refining performance, increasing efficiency, and gaining business synergy [5]. As mergers and acquisition of banks became a common phenomenon in the banking industry it also entails that the new organization structure appears from the two companies combined. Based from the abovementioned facts, the authors decided to study the financial synergy on mergers and acquisition of commercial banks for a mindset of knowing institutions’ financial stability and using this approach to attain economic growth.

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