A Study on the Feasibility and Consequence of Bank Merger Project of First Commercial Bank, Dah Ann Commercial Bank and Pan Asia Bank
Prof. Soushan Wu
Prof. Tseng-Chuan Tseng
|Keywords:||銀行合併;經營現況;個別特質;業務互補性;合併情形;Merger of Banks;Business Performance;Special Characteristics;Complementary;Merger|
Abstract Due to the acceleration of international economic integration in our global village, liberalization and globalization of financial institutions became the unavoidable trend. In order to respond quickly to the rapidly growing competitions among industry, large international banks tend to merger since the beginning of the 90’s. Bank of America merged with NationsBank. Travelers Group tied the knot with Citicorp. Nippon Trust Bank Limited and the subsidiary of The Bank of Tokyo Mitsubishi, Ltd., Tokyo Trust Bank merged under the aegis of Mitsubishi Trust Bank and established the Mitsubishi Trust Bank. These are all very well known cases. The increased merger and acquisition activities are to decrease business risk and lower the operation cost in order to pursue more profit. Banks in Taiwan, like those in any other countries, must face server competitions nowadays. The competition is even worse after new banks establishment was de-regulated by the government. In order to stay in the market and compete with a large number of financial institutions. Banks tend to have extension of loans but ended up with failed loans that drives down profit margins. Indirect financing became less employed. Most banks, once dominated business lending, struggled to survive from competition with non-bank lenders like life insurance, brokerage, and finance companies. Banks in Taiwan must not only provide more professional and diversified service, but also seek suitable partners to merge. In recent two years, Ministry of Finance encouraged banks to have corporate combination in order to increase their efficiency and become more competitive. Just recently, Taiwan Banks, Land Bank of Taiwan and Central Trust of China were planning the merger project. Besides, there are other merger cases such as ICBC-United World Chinese Commercial Bank-The Shanghai Commercial & Saving Bank, Ltd.; First Commercial Bank-Dah Ann Commercial Bank and Pan Asia Bank. For efficiency gained from exploiting scale economies, banks tend to have corporate combination with others of similar scale and constitution. Little studies were done to comprehend the relationship between the scale of banks, operating characteristics and the feasibility of merger. Therefore, the study is to have a case study on the merger of three banks--First Commercial Bank-Dah Ann Commercial Bank and Pan Asia Bank. The study addresses seven financial indicators and characteristics of target banks as the variables to evaluate the business performance of the banks and the possible consequence may occur after the merger. The complementary of business operation of the three banks would also be analyzed, for whether the merger may enhance the weakness of each bank generally speaking may be one of the motives of merger. According to the study result, there is not much similarity in business scale or scope between these three banks. It seemed that no complementary effect would be employed after consolidation. The possibility of a success merger may not be obvious. However, the merger would definitely increase the scale of the bank. On the other hand it some how solves some problems of financial institutions, for the government sake.
|Appears in Collections:||Thesis|