Why Do Banks Merge?

33 Pages Posted: 31 Jan 2003

See all articles by Fabio Panetta

Fabio Panetta

Bank of Italy

Dario Focarelli

ANIA - Italian Association of Insurance Companies; Catholic University of Milan

Carmelo Salleo

Bank of Italy

Multiple version iconThere are 3 versions of this paper

Date Written: January 2003

Abstract

The banking industry is consolidating at an accelerating pace, yet no conclusive results have emerged on the benefits of mergers and acquisitions. We analyze the Italian market, which is similar to other main European countries. By considering both acquisitions (i.e. the purchase of the majority of voting shares) and mergers we evidence the motives and results of each type of deal. Mergers are more likely between a more and a less services-oriented bank; they seek to improve income from services, but the resulting increase is offset by higher staff costs; return on equity improves because of changes in the capital structure. Acquisitions are more targeted towards banks with a poor credit management record; they aim to restructure the loan portfolio of the acquired bank; improved lending policies result in higher profits.

Suggested Citation

Panetta, Fabio and Focarelli, Dario and Salleo, Carmelo, Why Do Banks Merge? (January 2003). Available at SSRN: https://ssrn.com/abstract=374501 or http://dx.doi.org/10.2139/ssrn.374501

Fabio Panetta (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy
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Dario Focarelli

ANIA - Italian Association of Insurance Companies ( email )

Via di San Nicola da Tolentino, 72
Rome, 00187
Italy
+39.06.32688619 (Phone)
+39.06.91622570 (Fax)

Catholic University of Milan ( email )

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Milan, MI Milano 20123
Italy

HOME PAGE: http://https://docenti.unicatt.it/ppd2/it/#/it/docenti/71049/dario-focarelli/profilo

Carmelo Salleo

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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