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Why Do Banks Merge?

  • Dario Focarelli

    (Bank of Italy, Economic Research Department)

  • Fabio Panetta

    ()

    (Bank of Italy, Economic Research Department)

  • Carmelo Salleo

    (Bank of Italy, Economic Research Department)

Registered author(s):

    The banking industry is consolidating at an accelerating pace, yet no conclusive results have emerged on the benefits of mergers and acquisitions. We analyze the Italian market, which is similar to other main European countries. By considering both acquisitions (i.e. the purchase of the majority of voting shares) and mergers we evidence the motives and results of each type of deal. Mergers seek to improve income from services, but the increase is offset by higher staff costs; return on equity improves because of a decrease in capital. Acquisitions aim to restructure the loan portfolio of the acquired bank; improved lending policies result in higher profits.

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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/1999/1999-0361/tema_361it.pdf
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    Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 361.

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    Date of creation: Dec 1999
    Date of revision:
    Handle: RePEc:bdi:wptemi:td_361_99
    Contact details of provider: Postal: Via Nazionale, 91 - 00184 Roma
    Web page: http://www.bancaditalia.it

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