Mergers and acquisitions in the international banking sector

• Author: Botis, S.
• Position: Dept. of Finance, Accounting and Economic Theory, Transilvania University of Brasov
• Pages: 119-126

Bulletin of the Transilvania University of Braşov • Vol. 6 (55) •No. 1 - 2013

Series V: Economic Sciences

MERGERS AND ACQUISITIONS IN THE

INTERNATIONAL BANKING SECTOR

Sorina BOTI

1

Abstract: The economic crisis emphasized the risks that ba nks assume a nd

run. Reducing them is a strong rea son for the acceler ation of mergers and

acquisitions in the inter national ba nking field. The merger of ban king entities

has established itself a s a moder n method of global credit r isk manag ement

within every country and internationally. The main objective of this a rticle is

to highlight the latest developments on the bank mer gers a nd a cquisitions

market in the U.S. and EU and on emerging mar ket trends.

Key words: bank mergers, acq uisitions, international ba nking sector.

1 Dept. of Finance, Accounting and Economic Theory, Transilvania University of Braşov.

1. Introduction

The economic crisis emphasized the

risks that banks assume and run. Reducing

them is a strong reason for the acceleration

of mergers and acquisitions in the

international banking field.

Following the merger of two banks, the

market share of the banking entity is

increased, competition in the field is

diminished, creating the premises for an

increase in profits and having a

strengthened capital able to effectively

cover losses due to credit risk.

Other advantages that result from the

bank merger refer to the increase of

economies through the consolidation of

joint activities, restricting personnel costs,

increase revenue by joining two databases

of customers and making them available to

the two merging entities, portfolio

diversification of products offered,

portfolio of owned assets.

Banking entities merger has established

itself as a modern method of global credit

risk management within every country and

internationally.

According to Bloomberg Markets, the

bank mergers and acquisitions market has

fluctuated differently in recent years,

especially in America. JPMorgan Chase

was rewarded in 2012 with the title of the

biggest investment bank due to the value

of charged commissions. Commissions

obtained by the bank were of $ 3.97

billion, as agent in transactions with shares

of companies and from bonds issue, up by

24.8%.

The amount of commissions collected in

2012, by investment banks for mergers,

acquisitions, share issues and bond issues

increased by 3.7% to $ 50.9 billion due to

the intense activity from the refinancing

debt zone.

The value of mergers and acquisitions

made in 2012 was of $ 200 billion, down

with 8.7%, but analysts believe that 2013

could mean a comeback, although bankers

are still cautious.

The value of mergers and acquisitions

has fallen strongly in the last five years

after the historic peak of $ 4.100 billion

reached in 2007.