CASE STUDY MERGER HDFC BANK CENTURION BANK PUNJAB
H0 Null Hypothesis — There is no significant difference between the pre and post merger Return on Capital Employed H1 Alternative Hypothesis – There is a significant difference between the pre and post merger Return on Capital Employed 4. This bank based in Southern part of India had significant exposure to plantation industry and had weak credit risk management systems and processes. In this report I also added some mega mergers and acquisitions by some bigger companies in the year other than bank merger. The retail chains may run out of stock. Define cost management end-state This can be achieved through: The performance of the banks before and after the mergers and acquisitions has been compared.
Absa has consolidated its operation and increased focus on its core competencies instead of being all things to all people. The lack of size and scale acts as a major inhibitor to the Indian banks competing against the foreign banks. Foreign banks are likely to succeed in their niche markets and be the innovators in terms of technology introduction in the domestic scenario. The steady fall in the interest rates resulted in squeezed margins for the banks in general. A buyer often structures the transaction as an asset purchase to “cherry-pick” the assets that it wants and leave out the assets and liabilities that it does not. It is with great pleasure and privilege that I wish to thanks all of them who actively supported me in this project.
CPB has already applied for licenses to an additional 30 branches. An easy way for this is thus to go through adequate reconstruction to acquire the necessary technology and get an early mover advantage in globalizing the Indian Banks.
Data on deposits from RBI website Cemturion trends are observed in profit after tax, borrowings and interest and non interest incomes of the banks, thereby hinting at increased levels of fragmentation in the top 20 banks. Here again, the governments had come up with funding support and actively encouraged consolidation among banks. Define overall bank performance end-state This is achieved by ensuring that there is capital stability, along with profitability i.
As part of the integration of both banks, it is envisaged that there will be no retrenchment of staff of either bank and there will be no closure of any rural branches. Extra ordinary item 0 0 Prior year adjustments 0 0 Equity capital The RBI has also mandated a net worth of at least Rs crore for banks. Skip to main content. Eight new banks entered the market at this stage with state of art technology and a brought with them a new wave of professionalism.
The trends of falling spreads and investor’s demanding higher returns have pushed banks to generate additional returns. In the coming years globalization would spread further on account of the likely opening up of financial services under WTO. The first half of the sixties saw 45 forced mergers under section In order to usher in greater prudence in their operations, the RBI has barred Urban Cooperative Banks from financing the stock market operations and is also in the process of setting up of a new apex supervisory body for them.
VQ, but it will also have to pay a price say in cash to Q. A merger that crnturion a vertically integrated firm can be profitable However, on average and across the most commonly studied variables, acquiring firms’ financial performance does not positively change as a function of their acquisition activity.
Hdfc and centurion bank merger case study – Analytical Essays
However, the Guidelines indicate that a merger can also facilitate the ability of two or more competitors to exercise market power interdependently, through an explicit agreement or arrangement, or through other forms of behaviour that permit firms implicitly to coordinate their conduct.
Are we seeing the beginning of a phase of consolidation in Indian banking? These type of merger and the latest one that is going to happen between CBOP and HDFC bank would ensure that Indian banks are to take on the foreign banks when they enter the market in One can observe the concentration in the assurance and universal banking sections. As part of privatisation this Corporation is being wound up with the assets getting transferred to the banking system.
Similar to the US, the Indian banking industry too has undergone several changes since the initiation of financial sector reforms in Starting in the s with such cases as U. Evaluative Criteria Addresses the various evaluative criteria that are analyzed in the determination of the likely effects of a merger on competition in a relevant market.
The merger with these larger banks is expected to improve the asset profile, NPA management and protect the depositors at the same time offer the acquiring private sector banks further reach in terms of branches and customer base.
Merger of hdfc bank and centurion bank of punjab
Interest rates have thus been steadily deregulated in the past few years with banks atudy free to fix their Prime Lending Rates PLRs and deposit rates for most banking products. India has however remained more or less insulated. In the United States of America bank assets formed 28 percent of all financial assets inroughly half of what they were 20 years ago.
The surge in globalization of finance has also gained momentum with the technological advancements which have effectively overcome the national borders in the financial services business.
In practice the acquiring firm and the acquired firm may share the advantage between themselves.
Case Study of HDFC Bank and Centurion Bank of Punjab
Most retail banks try to obtain economies of scale by expanding-either by extending their networks or widening their range of products and services. Take the following cases of trouble in the recent past: So the high valuation of some of these banks though justified is highly demanding and in some cases overvalued. This type of cooperation led to widespread horizontal integration amongst firms of the era.
This includes various aspects of bank mergers. It has often been seen that companies are going for conglomerate mergers in order to increase their sizes.
At present, the foreign holding in CBP is at