Cimb Bank

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RESEARCH PROPOSAL
An Analysis on
Financial Performance of
CIMB Group Holding Berhad After Merged

PREPARED BY:

HARYANTI HUSSEN (2009476958)

BBA (HONS) FINANCE

PREPARED FOR:

PM MOHD ZAKI B. ZAKARIA

TABLE OF CONTENT

CHAPTER 1: INTRODUCTION

1.0 Background1
1.1 Overview of CIMB Bank2
1.2 Problem Statement4
1.3 Research Objectives4
1.4 Scope of the study5
1.5 Limitation of the study5
1.6 Significance of the study6
1.7 Definition of term7

CHAPTER 2: LITERATURE REVIEW

2.0 Introduction9

2.1 Negative impact9

2.2 Positive impact11

CHAPTER 3: RESEARCH METHODOLOGY

3.0 Introduction14

3.1 Data Collection Methods14

3.2 Methodology14

3.3 Data Analysis and Measurement15

3.3.1 Common Size Financial Statement Analysis15

3.3.2 Comparative Financial Statement Analysis15

3.3.3 Ratio Analysis15

3.3.3.1 Liquidity Ratio16

3.3.3.2 Leverage Ratio17

3.3.3.3 Activity Ratio18

3.3.3.4 Profitability Ratio18

REFERENCES20

CHAPTER 1

INTRODUCTION

1.0 Introduction

Merger and acquisition activity results in overall benefits to shareholders when the consolidated post-merger firm is more valuable than the simple sum of the two separate pre-merger firms. The primary cause of this gain in value is supposed to be the performance improvement following the merger. The research for post-merger performance gains has focused on improvements in any one of the following areas such as efficiency improvements, increased market power, or heightened diversification.

The purpose of the paper is to examine the financial performance of CIMB Bank after merged and effects of merger on the efficiency of the banks. The study has important implications such as guiding the government policy regarding deregulation mergers. Decision-makers hence need to be more cautious in promoting mergers in order to enjoying efficiency gains.

By the end of the 1970s, Bank Negara Malaysia believed that there were too many banks in the country compared to its real size. The creation of new banks was not allowed and the existing banks were encouraged to consolidate. However, the call for bank consolidation throughout the 80s was not received well by the bankers. Only a few consolidations took place after the economic decline in 1985-86.In order to minimize the potential impact of systemic risks on the banking sector as a whole, following the deepening of the financial crisis, the Government took stronger measurers to promote or in other word is force merging of banking institutions.

After the Asian financial crisis, the government announced a major consolidation in 1999 that would reduce the number of domestic banking institutions to ten banking groups by 2000. The ten banking groups or anchor banks are Malayan Banking Berhad, RHB Bank Berhad, Public Bank Berhad, Bumiputra-Commerce Bank Berhad, Multi-Purpose Bank Berhad, Hong Leong Bank Berhad, Perwira Affin Bank Berhad, Arab- Malaysian Bank Berhad, Southern Bank Berhad and EON Bank Berhad. Each bank had minimum shareholders’ funds of RM2 billion and asset base of at least RM25 billion.

1
1.1 Overview of CIMB Bank
For this research, I had choose the CIMB Group which is Malaysia's second largest financial services provider, and fifth largest in Southeast Asia by total assets. It is owned by CIMB Group Holdings Berhad, which is listed on Bursa Malaysia with a market capitalization of RM46.6 billion.

CIMB Group operates as a universal bank offering a full range of financial products and services, covering corporate and investment banking, consumer banking,...
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