A Process Perspective in the Banking Sector

Euro and the european banking system: evolutions and challenges, Editura Universitatii “Alexandru Ioan Cuza”, ISBN: 978-606-714-142-9, pp. 367-376, 2015

Despite continued global uncertainty, mergers and acquisitions (M&As) in banking industry remain essential instruments for growth initiatives in the coming years. Traditional pre-merger planning and analysis usually focus on legal and financial aspects. Nevertheless, numerous merging banks fail to anticipate intercultural aspects that could affect the real value of such transactions. However, banks also need to understand that cultural factors can critically affect the achievability of all planned targets. Incorporating cultural due diligence into the pre-merger phase of M&As is key to success. The biggest challenge in cross-border banking M&As is to know how far to pursue integration and how far to maintain cultural diversity as a synergy driver. In some cases, clashes of cultures within the merged entity appear to have been the reason for bank M&A failure, but few studies have analyzed these specific aspects. Our paper analyses the intercultural issues impact on the outcomes of international banking M&As in order to avoid the M&As disasters.

International Journal for Research in Applied Science & Engineering Technology (IJRASET), 2022

Purpose-The basic purpose of the study is to classify and present the current status of mergers and acquisitions (M&As) all over the world. Many robust aspects are appearing in post-2000 era. This research work is an effort to provide some emerging aspects to future researchers by reviewing the several accessible post-2000 literatures. These literatures are presenting the findings to give a comprehensive picture regarding M&As. Design/Methodology/Approach-Different sources were considered to download the research papers. A sample of 40 research papers is taken out of hundred paper downloaded for this study. These papers have been properly classified to demonstrate the present status on some aspects of M&As in banking sector. Findings-The present study organized the post-2000 literature from 2001 to 2018. A significant growth was noticed in recent five years i.e. from 2014 to 2018. The study covered many emerging aspects of M&As in banking sector. Originality/Value-The paper offers in-depth analysis of literatures, organize it properly and give a comprehensive bibliography to the future researchers. Further, it will be helpful to the academicians, investors, practitioners and Government to understand different facets which buffeted by the wind of change over the sample period.

RePEc: Research Papers in Economics, 2009

International Journal For Multidisciplinary Research

Merger and Acquisition is the management and strategy dealing with purchasing and/or merging with another entity .In merger two different organizations combine to make a new business ,usually with a new name.Because the companies involved are typically of smaller size and structure. With the help of merger and acquisition in the banking sector the banks can achieve significant growth in their operation and minimize their expenses. Merger eliminates competitor from banking Industry .This study shows the impact of Merger and Acquisition in the Banking Sector. For this purpose ,a comparison between pre and post merger i.e ROE(Return on equity, EPS(Earning per share),Debt Equity Ratio, Net profit Ratio. In this research paper I have selected merger of ICICI Bank and Bank of Rajasthan, HDFC Bank and Centurion Bank and Kotak with ING Vysya.

2014

In this paper I am trying to analyze the concepts of bank merging and acquisitions, the causes that led to their appearance, their effects on the banking system and their future perspective in the field of banking market. The main reason for choosing this topic is based on the fact that in the evolution of banking concentration, bank merging and acquisitions have a special role, they are necessary withdrawal operations of banking life, through the absorption of banks without viability by those that have a viable capital, economical and managing potential. It is well known the fact that large, very powerful and well established banks, created after processes of merging and acquisitions, have a different potential in maintaining the profit flow and balanced growth of profit, having a great impact over the economy. The contribution is based on combining some conceptual elements with some empirical aspects, bank merging and acquisitions represent a worldwide present-day process, having ...

Advances in economics, business and management research, 2023

Merger and acquisition have seemed to be a generally-accepted and expected business strategy for any firm to grow. It does offer a compelling potential for exponential business growth and ROI to the shareholders. It is interesting that up to 70% of the global merger and acquisitions failed miserably. The milliondollar investment that the management and shareholders expected to be returned positively, turns out, even in some cases, to be a huge cost and an apparent valuedestroying decision. HR management issues are mostly the cause behind these failures, starting from as simple as misinformation to as profound as cultural integration failure. This case study investigated the strategies and implementation of compensation, talent placement, and internal communication in a merger and acquisition case of two multinational banks in Indonesia, and the case was dated back in 2018. To obtain valuable information and a better understanding of the overall picture of strategic planning, implementation, and best methods, triangulation was used in this study. This study solely used interviews for data collection methods and has conducted fifteen interviews clustered into three main categories-migrated employees, change agents, and consultants. The result of this study showed that these variables should not be left ignored, as it happened in many M&A cases. Not to mention that these variables are apparently the main component of how well M&A companies could be able to shift into full speed on productivity level after the integration process.

The reduction in barriers to mergers and acquisitions, both within and across countries, has facilitated the ability of firms everywhere to pursue their expansion goals. In particular, the World Trade Organization, with its approximately 150 member countries, has helped open wider the doors to cross-border consolidations. This article examines bank mergers in an effort to identify factors that explain both the number and value of all deals completed, as well as separately for both within country (domestic) and across country (cross-border) mergers and acquisitions. We specifically focus on the importance of several entry barrier, bank regulatory, macro-governance, and macro-economic country-specific variables in explaining bank mergers and acquisitions from 1995 to 2007 drawing upon new and unique datasets. This type of information should prove useful to policymakers, analysts and other individuals trying to better understand where and to what extent bank consolidation is occurring and some of the factors that provide an incentive or, conversely, a barrier to do banking deals around the world.

Social Science Research Network, 2017

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Purpose – Consolidation through mergers and acquisitions indicates one of the major outcomes of the financial transformation process and contemporary trend in the Indian banking sector. Literature suggests that the pre-merger financials of banks are crucial in deciding the post-merger performance of merged entities. In this context, the aim of the present study is to provide insights on the strategic and financial similarities of merging partners in the bank mergers that occurred in the post-liberalization India. Design/methodology/approach – This paper considers all bank merger deals in the post-liberalization period, which involve purchase consideration either in the form of stock or cash. Hypotheses about the strategic similarities and dissimilarities are tested. The study considers all important aspects such as relative size of targets, diversity of earnings, efficiency, financial leverage, prudential norms and profitability. Findings – The study finds that banks are dissimilar in most of the key areas, and these might have an adverse impact on the post-merger performance. Originality/value – The study is original because we take into account all the bank merger deals in the period, which involve purchase consideration either in the form of stock or cash.

SSRN Electronic Journal, 2000

The intense concentration process taking place in the financial systems of the major countries has attracted substantial attention from stakeholders and academics. The impact of M&A on value creation and efficiency / effectiveness improvements of banks involved appears, on the whole, disappointing and still hard to create benefits for customers. The reason seems to lie in the difficulty of governing a post-merger integration process, which generally requires good governance and management practices, significant experience and attention to cultural profiles and individuals' behavior. More in detail, management literature recognizes the importance of corporate culture, considered as the set of values and decisions that drive individuals' behaviors within organizations, for explaining alliance success in M&A operations. In fact cultural clashes could determine conflicts and negative effects, on one hand, on the timing and the effectiveness of the post-merger integration process and, on the other hand, on motivation and turnover of individuals. Set in Italian banking industry, this paper proposes a framework, applied to a representative sample of cases (about 78,2% of market share, based on total assets), for assessing cultural similarity of actors involved in M&A operations. Corporate culture is measured using an ethnographic approach focusing on language as its special artifact. The assessment is based on the definition of some key concepts that are relevant for the banking industry (e.g., competencies, competition, customer, disclosure, human resources, innovation, risk) and on a text-analysis model applied to a corpus of reference texts produced by the surveyed banks three years before M&A. The elaboration of data uses Wordsmith 4, a text analysis software developed by Oxford University. The paper is organized as follows: at first, we analyze and explain how low levels of cultural compatibility before M&A could limit the success of post-merger integration processes of banks. After, we propose and describe the measurement procedure of the cultural fit among bidder and target banks, based on text analysis. Lastly, we conclude with the discussion of the results obtained for each couple of banks involved in M&A and with suggestions for future applications of our framework.

SSRN Electronic Journal, 2006

Recent reports on banking sector often indicate that India is slowly but surely moving from a regime of `large number of small banks' to `small number of large banks'. The aim of this paper is to probe into the various motivations for mergers and acquisitions in the Indian Banking sector. Thus, literature is reviewed to look into the various motivations behind a banks' merger/ acquisition event. The paper also takes us through the international mergers & acquisitions scenario comparing it with the Indian scene. Given the increasing role of the economic power in the turf war of nations, the paper looks at the significant role of the state and the central bank in protecting customer's interests vis-à-vis creating players of international size. While, gazing at the mergers & acquisitions in the Indian Banking Sector both from an opportunity and as imperative perspectives, the paper also glances at the large implications for the nation.

Social Science Research Network, 2009

During the last decades, the European banking system has known some deep changes. They have led to mergers and acquisitions (M&As). The available studies show that the failure rate of theses M&As is relatively high. Cross-border operations are more exposed to this risk. The high failure rate is due to the cultural and contextual differences between the M&A participants, differences which make the process of integration particularly difficult. Thus, the success of M&As depends on the choice of adequate M&A targets. This choice constitutes the main challenge for company leadership. The aim of this paper is therefore to determine the factors which permit to identify the best M&A targets. Our contribution compared to that of previous research is that we study M&As and the identification of targets by line of bank activities. On the basis of a sample made up of 1071 European banks, between 2000 and 2006, we use a Logit Multinomial Model. Our main results show that the target banks tend to be specialized in investment and market activities while the acquiring banks tend to approach themselves to the universal bank model.

2009

International Journal of Research Publication and Reviews

This study explores mergers and acquisitions (M&A) in the Indian banking sector. It examines the motivations, challenges, and outcomes of M&A transactions in this industry. The study combines quantitative analysis of financial data and qualitative analysis. The research reveals that M&A transactions in Indian banking are driven by factors like market consolidation and expansion needs. It highlights integration challenges, such as cultural differences and IT system integration, and examines the impact of M&A on financial performance. The study provides valuable recommendations for banks, regulators, and policymakers and contributes to understanding M&A dynamics in emerging economies.

This paper examines the motivations for mergers and acquisitions in the Indian banking sector from 2014 to 2019. During this time, nine banks were merged into three, including the Mega-merger of SBI and its five allies. To identify motivations in the banking industry, the data was analysed using a two-stage multivariate technique. The most significant motives in M&As, according to factor analysis, are synergy, diversity, and faster market access, profitability, economies of scale, and quick responsiveness to economic conditions. The contribution of these extracted components to market share was investigated using the regression approach. The findings reveal that the strategic factor, performance factor and growth factor have positive effects on enhancing the market share.