IDEAS home Printed from https://ideas.repec.org/h/erf/erfssc/36-1.html
   My bibliography  Save this book chapter

Banking Mergers and Acquisitions in the EU: Overview, Assessment and Prospects

Author

Listed:
  • Rym Ayadi
  • Georges Pujals

Abstract

This paper aims at providing a complete picture of banking mergers and acquisitions (M&As) in Europe during the 1990s and at offering economic evaluation and strategic analyses of the process. The main characteristics of this process in the 1990s were the emergence of " mega banks" at the national scale, a slight increase of cross-border transactions and the emergence of few large pan-European financial groups. Building on an extensive review of the US and EU literature, we examine the impact of M&As in European banking on profitability and efficiency, considering the breakdown between domestic and cross-border transactions. We first proceed with the profitability analysis of distinct completed M&As cases with different industrial strategies (based on the geographical dimension of the transaction and the initial activities of the merging banks). We find that domestic mergers contribute to cut costs for both partners, whereas, for the majority of cases studies, including domestic and cross-border mergers and acquisitions, the impact on profitability is insignificant, but a clear trend to diversify the sources of revenues was apparent. The cost and profit efficiency analysis based on 33 bank-to-bank mergers, confirmed an improvement of cost efficiency and little improvement of profit efficiency for domestic transactions; whereas, no improvement of costefficiency and a little improvement of profit efficiency for cross-border transactions. These results imply that domestic banking mergers in Europe fulfilled their objective to cut costs whereas they failed to achieve revenues synergies; cross-border mergers instead, were proved to better exploit from revenues synergies more likely due to geographical diversification. Against this background, we provide the main prospective scenarios for banking consolidation in the medium term after examining the state of concentration and competition in the domestic banking markets and the role of the regulatory changes and r
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Rym Ayadi & Georges Pujals, 2005. "Banking Mergers and Acquisitions in the EU: Overview, Assessment and Prospects," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  • Handle: RePEc:erf:erfssc:36-1
    as

    Download full text from publisher

    File URL: http://www.suerf.org/docx/s_210f760a89db30aa72ca258a3483cc7f_883_suerf.pdf
    File Function: Main Text
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sharpe, William F., 1967. "Portfolio Analysis," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 2(02), pages 76-84, June.
    2. Altunbas, Y. & Gardener, E. P. M. & Molyneux, P. & Moore, B., 2001. "Efficiency in European banking," European Economic Review, Elsevier, vol. 45(10), pages 1931-1955, December.
    3. Peristiani, Stavros, 1997. "Do Mergers Improve the X-Efficiency and Scale Efficiency of U.S. Banks? Evidence from the 1980s," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(3), pages 326-337, August.
    4. David C. Wheelock & Paul W. Wilson, 1995. "Evaluating the efficiency of commercial banks: does our view of what banks do matter?," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 39-52.
    5. Resti, Andrea, 1998. "Regulation Can Foster Mergers, Can Mergers Foster Efficiency? The Italian Case," Journal of Economics and Business, Elsevier, vol. 50(2), pages 157-169, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Clements Adeyinka Akinsoyinu, 2015. "Efficiency Evaluation of European Financial Cooperative Sector. A Data Envelopment Analysis Approach," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(4), pages 11-21, October.
    2. Goddard, John & Molyneux, Philip & Wilson, John O.S. & Tavakoli, Manouche, 2007. "European banking: An overview," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 1911-1935, July.
    3. Coccorese, Paolo, 2012. "Banks as ‘fat cats’: Branching and price decisions in a two-stage model of competition," Journal of Economics and Business, Elsevier, vol. 64(5), pages 338-363.
    4. Lee, Tung-Hao & Chih, Shu-Hwa, 2013. "Does financial regulation affect the profit efficiency and risk of banks? Evidence from China's commercial banks," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 705-724.
    5. Claudia M. Buch & Gayle L. DeLong, 2008. "Banking Globalization: International Consolidation and Mergers in Banking," IAW Discussion Papers 38, Institut für Angewandte Wirtschaftsforschung (IAW).

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:erf:erfssc:36-1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dragana Popovic). General contact details of provider: http://edirc.repec.org/data/suerfea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.