商业银行管理Chap019.pptVIP

The 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 federal deposit insurance reserves and avoid an interruption of customer service when a depository institution is about to fail The great credit crunch of 2007–2009 resulted in numerous financial firms either failing or in real trouble for which mergers and acquisitions were often the only option The Motives 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 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 Financial 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 facilities 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 type Means that the merging institutions do not overlap much or at all in terms of geographic area served The Motives Behind the Rapid Growth of Financial-Service Mergers (continued) Mergers as a Device for Reducing Competition When