Question

Mergers and acquisitions are one of the most important trends in banking in the last generation. Please find one example of a major merger in the last twenty years. Give a brief description of each bank before the merger, the motivation for the merger, and the final product after the merger.

Answer 1

Mergers and acquisitions are always good in the financial space because it will provide with a large market share and Synergy benefits.

Recent merger was of State Bank of India along with its other subsidiary which was State Bank of Bikaner and Jaipur.

Motivation of merging of a smaller banks into State Bank of India was that these banks were providing loans to to smaller section of society and they wanted to gain More market share and State Bank of India being the National Bank was having the large market share so they both got merged.

they also got merged in order to enhance their books of accounts because their Net Asset quality was bad and it would have helped a State Bank of India as it is an efficient banking institution who has a quality management in order to change the fortune of merged company

Merger would have also resulted into Synergy benefits for both the company as both company were working in the similar space and they were also working at different stages of a business chain so the market growth would have been higher and State Bank of India will have get to regional customers as well.

motivation for the merger was to gain a large market share abd a large amount of public confidence along with to improve the books of accounts and recapitalisation of Bank.

The final product after merger came out not as expected, but there were problems in being operational at the regional level. Asset quality term bad but their expectations that it is going to improve with time.