A large number of international and domestic banks all over the world are engaged in merger and acquisition activities. All assets, liabilities and stock of one company transferred to transferee company in consideration of payment in the form of equity shares of transferee company or debentures or cash or a mix of two or three modes.
Economies of Scope An ability to grow products and segments and an opportunity to cross sell would enhance revenue. As of Marchthe number of scheduled Commercial banks in the country was Sometimes, this attempt to expand can produce opposite effects. Relative size of M partner, managerial involvement, culture and organizational structural issues etc.
Merger or acquisition can be used to fulfill the desire of rapid growth in size or market share or diversification in range of products and services by merging or acquiring an existing firm that provides services other than what are provided by the acquirer firm.
Generally, the company, which survives, is the buyer, which retains the identity, and seller company is extinguished. Tax benefits may be allowed in the form of carry forward of loss and unabsorbed depreciation in case of sick unit with a healthy unit.
They used Multinomial logic analysis to conclude the characteristics of continental European financial institutions and observed that size is an important factor in mergers and acquisitions. Mergers can also result in poor credit flow to small business segments and major share may go to corporate sector, thus affecting the economic cycle.
The survivor acquires the assets as well as liabilities of the merged company or companies. The mergers were not for economic considerations and usually distress mergers, eg. As a result such banks are encouraged to pursue imprudent credit and investment policies, and may also carry systematic risk along with them.
But many fear that the desire for size is leading to unhealthy creation of super banks. Operating economies are one form of synergy benefits. The merger of Dime Bancorp, Inc. Other routes may be resorted to create world-class banks.
In India this line of thinking is gaining speed in recent times. When an acquisition is "forced" or "unwilling", it is called takeover. The firm may achieve the same objective in a short period by merging with an existing firm. The new company is named FleetBoston Financial Corporation.
The footprints of banks ought to cover rural and interior India and the entire process of consolidation would have to be market driven.Reserve Bank of India in April The below mentioned table gives details of all the mergers and amalgamations done by ICICI Bank.
Table 1 Mergers by ICICI Bank Ltd.
in India S. No. Mergers by ICICI Bank Ltd. in India Year of Merger 1. SCICI 2. ITC Classic Finance Ltd. 3 Anagram Finance 4. Bank of Madura Ltd.
5. Merger of ICICI Bank with Bank of Madura in ICICI one of the largest financial institution was formed in at the initiative of the World Bank, the Government of India and. efficiency benefits from bank mergers (since there exists substantial X-inefficiency in the industry), “but the data show that on an average, such benefits were not realized by the US mergers of the s” (Berger and Humphrey, ).
Consolidation in Banking Industry in India through Mergers and Acquisitions: By Dr. Sudhindra Bhat MBA, MFM, PGDIR & PM, PGDS & MM, M. Phil, Ph.D** Associate Professor. The aim of this paper is to probe the motives of banks for mergers and acquisition with special reference to Indian Banking Industry.
For this purpose sample of 17 mergers (post liberalization) of. The project aims to understand the behavior of various “Mergers and Acquisitions in Indian Banking Sector.” A large number of international and domestic banks a Mergers & Acquisitions in Indian Banking Sector.
48 Pages Posted: 25 Nov A relatively new dimension in the Indian banking industry is accelerated through mergers and.Download