商业银行管理Chap019课件.ppt
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1、Chapter Nineteen Acquisitions and Mergers in Financial-Services ManagementKey Topics Merger Trends in the United States and Abroad Motives for Merger Selecting a Suitable Merger Partner U.S.and European Merger Rules Making a Merger Successful Research on Merger Motives and OutcomesIntroduction A glo
2、be wave of mergers involving banks,securities firms,insurance companies,and other financial-service providers has been under way Reflects the great forces of consolidation and convergence that are dramatically reshaping the financial-services industry This trend is driven byqIntense competitionqDere
3、gulationqThe search for the optimal size financial-services organization Mergers on the Rise Many of the mergers sweeping through the banking industry reflect lower legal barriers that previously prohibited or restricted expansion For example,in the U.S.,the Riegle-Neal Interstate Banking Act of 199
4、4 and the Gramm-Leach-Bliley(GLB)Act of 1999 The GLB law opened wide the arena for banknonbank financial-service combinations Permits banks,insurance companies,and security firms to acquire each other Critics of the GLB law argue that while GLB may result in reducing U.S.financial firms risk exposur
5、e,it does not appear to hold great promise for major improvements in operating efficiency Mergers on the Rise(continued)Competition among European financial firms is becoming more intense,leading to continuing mergers and acquisitions Financial-service mergers in Europe have slowed from time to time
6、 due to a slowing economy and European governments attempts to protect their home banks from acquisition by outsiders Asia and Japan also have experienced a growing number of mergers Due to an effort to shore up credit quality problems,fend off the ravages of deflation and sluggish economies,and com
7、pete with powerful U.S.and European banksTABLE 191 Recent Leading International Financial-Service Mergers and AcquisitionsTABLE 192 Some of the Largest Financial-Service Mergers and Acquisitions in American HistoryThe Motives Behind the Rapid Growth of Financial-Service Mergers Mergers usually occur
8、 because1.The stockholders involved expect to increase their wealth or reduce their risk exposure2.Management expects to gain higher salaries and employee benefits,greater job security,or greater prestige from managing a larger firm3.Both stockholders and management may reap benefits from a mergerTh
9、e Motives Behind the Rapid Growth of Financial-Service Mergers(continued)Profit Potential Some argue that the recent increase in financial-service mergers reflects the expectation of stockholders that profit potential will increase once a merger is completed If the acquiring organization has more sk
10、illful management than the firm it acquires,revenues and earnings may rise Especially true of interstate or international mergers where many new markets are entered If the acquiring firms management is better trained than the management of the acquired institution,the efficiency of the merged organi
11、zation may increase May result in more control over operating expensesThe Motives Behind the Rapid Growth of Financial-Service Mergers(continued)Risk Reduction Many merger partners anticipate reduced cash flow risk and reduced earnings risk The lower risk may arise because Mergers increase the overa
12、ll size and prestige of an organization Open up new markets with different economic characteristics from markets already served Make possible the offering of new services whose cash flows are different in timing from cash flows generated by existing services Mergers can result in a more stable finan
13、cial firm,able to withstand fluctuations in economic conditionsThe Motives Behind the Rapid Growth of Financial-Service Mergers(continued)Rescue of Failing Institutions The failure of a company is often a motive for merger Many bank mergers have been encouraged by the FDIC as a way to conserve feder
14、al deposit insurance reserves and avoid an interruption of customer service when a depository institution is about to fail The great credit crunch of 20072009 resulted in numerous financial firms either failing or in real trouble for which mergers and acquisitions were often the only optionThe Motiv
15、es Behind the Rapid Growth of Financial-Service Mergers(continued)Rescue of Failing Institutions The Motives Behind the Rapid Growth of Financial-Service Mergers(continued)Tax and Market-Positioning Motive Many mergers arise from expected tax benefits Especially where the acquired firm has earnings
16、losses that can be used to offset taxable profits of the acquirer There may also be market-positioning benefits A merger will permit the acquiring institution to acquire a base in a completely new market Examples of U.S.market-positioning acquisitions:Bank of America Corp.acquiring FleetBoston Finan
17、cial Corp.Wachovia Corp.acquiring Golden West Capital One Corp.acquiring North Fork Bancorp and Hibernia Corp.The Motives Behind the Rapid Growth of Financial-Service Mergers(continued)The Cost Savings or Efficiency Motive Large-scale staff reductions and savings from eliminating duplicate facilitie
18、s have followed in the wake of some of the largest mergers in the financial-services sector Research has shown that sometimes the single most important merger motivation was the desire to reduce operating costs followed by a plan to diversify into new markets Many mergers are of the market extension
19、 type Means that the merging institutions do not overlap much or at all in terms of geographic area servedThe Motives Behind the Rapid Growth of Financial-Service Mergers(continued)Mergers as a Device for Reducing Competition When two competitors are allowed to merge,the public is served by fewer ri
20、vals for their business Service quality may diminish and prices and profits may rise More aggressive prosecution of the antitrust laws may need to be consideredThe Motives Behind the Rapid Growth of Financial-Service Mergers(continued)Mergers as a Device for Maximizing Managements Welfare(An Agency
21、Problem)Management may view a prospective acquisition as a way to increase salaries and employee benefits,lower the risk of being fired,and enhance managers reputation in the labor market from working for a bigger firm If managers reap these benefits at the expense of company stockholders,an agency
22、problem emergesThe Motives Behind the Rapid Growth of Financial-Service Mergers(continued)Other Merger Motives Increased growth capacity Enables a lending institution to expand its loan limit to better accommodate large and growing corporate customers This is particularly important in markets where
23、the lenders principal business customers may be growing more rapidly than the lending institution itself Give smaller institutions access to capable new management and costly new electronic technologySelecting a Suitable Merger Partner How can management and the owners of a financial firm decide if
24、a proposed merger is good for the organization?Measure both the costs and benefits of a proposed merger(not easy to do)A merger is beneficial to the stockholders in the long run if it increases the stock price per share The price of a financial firms stock depends upon1.The expected stream of future
25、 dividends flowing to the stockholders2.The discount factor applied to the future stock dividend stream,based on the rate of return required by investments of comparable riskSelecting a Suitable Merger Partner(continued)In order to maximize stockholder value,the proposed merger should Improve Operat
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