By Steven I. Davis
Why do banks around the globe proceed to merge and traders proceed to inspire such mergers while the significant physique of educational examine demonstrates that mergers both upload no price or truly lessen stockholder worth? A former banker and present advisor to banks within the US and Europe, Mr. Davis addresses this factor via a chain of in-depth interviews with senior executives from over 30 banks with broad merger event, in addition to over a dozen banking analysts and specialists. Key concerns resembling the power to accomplish major price and profit synergies, due diligence, humans choice, IT integration, cultural clash, management and pace of decision-making are all tested intimately. whereas the interviewees nearly unanimously expect an acceleration of the present merger development, the publication concludes with an exam of choices to this consensus. It offers suggestions for the long run in focussing at the value of considerable rate mark downs, enterprise and skilled management, effective IT integration and rapid determination making. eventually it means that the deliberate explosion of pass border mergers calls for a revision of the outdated merger version in line with enormous brief time period rate reductions.
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Within that period, hopefully all key decisions should be made: the type of bank to be created, the strategies needed to achieve that strategic goal, the cultural profile of the new bank, the organisational structure and key people to run it, the issues which are likely to be encountered, and the major operational decisions to be made. THE TRADE-OFF BETWEEN SPEED AND OTHER VARIABLES But speed must be tempered by other variables. One such key element, as discussed above, is the type of merger envisaged: federation, best of both or transformation.
The largest synergies were projected for the merger of Bank One with its credit card acquisition First USA and by Fortis, who will apply the lessons of cross-selling success of one Belgian affiliate to another. Yet a number of banks continue to win additional revenues from the merger process. 9 31 Percentage of customer funds loss per branch closed Bank A 16 11 Bank B 9 Bank C Bank D 6 Bank E Bank F Average 4 3 8 Source: McKinsey & Company. Comercial Portugues (BCP) have a track record of improving the crosssell ratio of the banks they acquire.
We discuss in Chapter 8 in more detail the impact on mergers such as those of Hypo Vereinsbank, BBV, original Bank Austria and UBS mergers of such a `bump on the road' which creates acrimony in an already strained environment. Conversely, a supposedly unfriendly merger stemming from a contested take-over bid or sale over the head of management by a controlling stockholder can become essentially a friendly one. For example, the Bank Austria/Creditanstalt merger began as a take-over vigorously resisted by the CEO and many executives of Creditanstalt concerned about their purchase by their traditional rival.