Post by Megha on Feb 3, 2005 15:13:31 GMT 5.5
Consolidation In Banking Industries:--Merger Or Acquisition
Merger mania is sweeping the Indian Banking community.What is the long run equilibrium structure of banking industry in India? Obviously we do not know the answer to this question now,but some careful analysis may illuminate our thinking &lead to some useful predictions about the future shape of banking.
Meaning of some Term
**Merger=Merger is defined as combination of 2 or more companies into a single company where one survives &other loose their corporate existence.
**Consolidation = It is known as fusion of 2 existing companies into a new entity in which both the existing companies extinguish .Thus consolidation is mixing up of 2 companies to make them into new one in which both existing companies loose in which both existing companies loose their identity &cease to exist .The mixup assests of 2 companies are known by new name &shareholders of 2 companies become shareholders of new company.
**Acquisition=It is in general is acquiring the ownership in property .In context of business combination an acquisition is purchase by1 company of a controlling interest in share capital of another existing company.
In todays connected world banks will have to be competitive in order to face the challenges &leverage the opportunities .The ultimate goals of bank are to increase its market power,become more diversified ,reduce the risk of entering a new business & redefine the competitive edge.
Acc. to our Finance Minister :--"International trends suggest that consolidation has reduced the chances of credit risks .However the consolidation has to be addressed not merely to create large behemoths but to benefit from the synergy created by mergers.
Consolidation in banking industry by mergers &acquisition is need of hour and cannot be avoided.A lot of companies have been taken over by other companies to make a mega company .After merging 2-3 big banks ,it will be a very sized bank which will be seen as a market leader.It will not only improve the position &rating of particular bank but also of country as a whole .At present we have only 1 bank "State Bank Of India" that is ranked amongst top 200 banks in the world.
Do u think this consolidation really change our economy.It really helpful for Indian banks.
Give ur views and suggestion on this
Bye
Megha
Merger mania is sweeping the Indian Banking community.What is the long run equilibrium structure of banking industry in India? Obviously we do not know the answer to this question now,but some careful analysis may illuminate our thinking &lead to some useful predictions about the future shape of banking.
Meaning of some Term
**Merger=Merger is defined as combination of 2 or more companies into a single company where one survives &other loose their corporate existence.
**Consolidation = It is known as fusion of 2 existing companies into a new entity in which both the existing companies extinguish .Thus consolidation is mixing up of 2 companies to make them into new one in which both existing companies loose in which both existing companies loose their identity &cease to exist .The mixup assests of 2 companies are known by new name &shareholders of 2 companies become shareholders of new company.
**Acquisition=It is in general is acquiring the ownership in property .In context of business combination an acquisition is purchase by1 company of a controlling interest in share capital of another existing company.
In todays connected world banks will have to be competitive in order to face the challenges &leverage the opportunities .The ultimate goals of bank are to increase its market power,become more diversified ,reduce the risk of entering a new business & redefine the competitive edge.
Acc. to our Finance Minister :--"International trends suggest that consolidation has reduced the chances of credit risks .However the consolidation has to be addressed not merely to create large behemoths but to benefit from the synergy created by mergers.
Consolidation in banking industry by mergers &acquisition is need of hour and cannot be avoided.A lot of companies have been taken over by other companies to make a mega company .After merging 2-3 big banks ,it will be a very sized bank which will be seen as a market leader.It will not only improve the position &rating of particular bank but also of country as a whole .At present we have only 1 bank "State Bank Of India" that is ranked amongst top 200 banks in the world.
Do u think this consolidation really change our economy.It really helpful for Indian banks.
Give ur views and suggestion on this
Bye
Megha