Home Search Sitemap Contact Bookmark

Free Dissertations - Finance Dissertations

What Are The Motives And Acquisitions For Uk Banking? The Overall Problem ...


What are the motives and acquisitions for UK banking?
The overall problem with this subject
The trouble I've had in answering this question, or coming up with a suitable proposal to answer it, is that I asked if it was UK retail banking that should be the subject and was told yes it was. This has traditionally been very concentrated in the UK, the big four National Westminster, Barclays, Midlands (now owned by HBoS) and Lloyds (now TSB) have been around for decades. You can now add Royal Bank of Scotland to the list.
So I was surprised to read in an article (Chionsini, Foglia & Reedtz, 2003, P.8) that there had been 140 acquisitions in the UK between 1990 to 1995 where a bank had been a target and 279 in the period 1996 to 2001. This makes sense, of course, if you include Investment Banking companies. The so called Big Bang deregulation (see Sudarsanam, 2003, P.25) of the financial services in the City of London, which started in 1986, paved the way for the US investment banks and then subsequently the continental companies (Augar, 2000). The majority of the multitude of merchant banks, brokerage houses and securities firms have now been swallowed up. There seems little reason to look at this from a UK perspective of acquisitions when most of the UK companies have been the targets. Referring back to the title of the proposal it is for

An important question is the issue of STRATEGIC FIT particularly as this applies to the merging of two independent corporate cultures. How this might improve shareholder value is an avenue for further research.
First question is what are the motives for WHO? Bank Regulator, Shareholders, Managers, Owner-controlled banks.
The integration of financial markets has blurred the distinctions between activities such as lending, investment banking, asset management and insurance.
Regulation has come down Technological innovation
Firms are finding that to be successful they have to compete globally.
In Europe consolidation is mainly a national phenomenon. There is a political dimension that protects national flagships (Boots, 1999).
Cross-border deals add a new layer of complexity to the merger process (Berger, DeYoung, Genay & Udell, 1999). Even within a national level improved performance is hard to detect.
Bank Regulator: bank regulators may need to look at the potential efficiencies as well as the competitive impact of bank acquisitions. Regulators are less concerned with efficiency as they are market concentration.
Bank strategies are especially relevant in the context of a diminished regulatory environment circumscribing the activities of banking firms.
Although previously restricted from engaging in the diversification activities favoured by industrial managers, banking corporations may now expand into new geographical locations and non-banking businesses more freely than any time since the Glass-Steagall Act.
(Amit, Livnat & Zarowin, ????).


Thanks