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Asset Restructuring Strategies in Bank Acquisitions: Evidence from the Italian Banking Industry

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Author Info

  • Pietro ALESSANDRINI

    ()
    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Giorgio CALCAGNINI

    (Universit… di Urbino "Carlo Bo", Facolt… di Economia)

  • Alberto ZAZZARO

    ()
    (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

One of the most lively debated effects of banking acquisitions is the change in lending and asset allocation of the target bank in favour of transactional activities, at the expense of small and informational opaque borrowers. These changes may be the result of two distinct restructuring strategies of the asset portfolio of the bidder bank. An asset cleaning strategy (ACS), in which the acquiring bank makes a clean sweep of all the negative net present value activities in the portfolio of the acquired bank, and an asset portfolio strategy (APS), in which the acquiring bank permanently changes the portfolio allocation of the acquired bank. In this paper we focus on Italian bank acquisitions and test which asset restructuring strategy was predominantly pursued over the period 1997-2003. Moreover, we estimate both a model for the whole Italian banking industry and a model for the acquired banks located in economic backward Southern regions. At the national level we find evidence of a primacy of ACSs over APSs. When we concentrate on bank acquisitions that occurred in the Mezzogiorno (Italy’s Southern regions), evidence seems to reverse, i.e. APSs dominate over ACSs.

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Bibliographic Info

Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 264.

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Length: 37
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:anc:wpaper:264

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Keywords: asset restructuring strategies; bank acquisitions; small business lending;

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References

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Cited by:
  1. Pietro Alessandrini & Andrea F. Presbitero & Alberto Zazzaro, 2007. "Banks, distances, and financing constraints for firms," Proceedings 1053, Federal Reserve Bank of Chicago.
  2. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Ugo FRATESI, 2010. "The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics," Working Papers 344, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  4. Luca RICCETTI, 2010. "Minimum Tracking Error Volatility," Working Papers 340, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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