Impact of Mergers and Acquisition

Topics: Mergers and acquisitions, Merger integration Pages: 31 (10644 words) Published: December 31, 2012
Imapact of merger and aquisitions
1.1 Background of the Study
The Pakistani banking sector has undergone extraordinary transformation over the years, in provisions of number of organizations, ownership constitution, as well as the deepness of operations. These modifications have been prejudiced mostly by challenges pretended by deregulation in policies of financial sector, globalization of procedures, technical innovations and embracing of managerial and prudential necessities that kowtow to international principles. The wave of merger and acquisitions that currently swept through the banking sector started after the announcement by the state bank of Pakistan, that banks in Pakistan should beef up their minimum capital adequacy ratio should according to bank risk weighted assets or set by SBP. Mergers and Acquisitions are commonplace in developing countries of the world but are just becoming prominent in Pakistan. Merger and acquisition is simply another way of saying survival of the fittest that is to say a bigger, more efficient, better-capitalized, more skilled industry. Is part of the natural evolution of industries? It is primary driven by Business motives or market forces and Regulatory interventions. The issues therefore , which this study intend to address are whether merger and acquisition will bring about efficient reliable and sound capital base for the bank that fully embraced mergers and to what extend can bank merge boost the confidence of the customers , the investors , the shareholders and ability to finance the real time sector . 1.2 Problem statement

The recent sudden increase of bank mergers in Pakistan is attracting much attention, partly because of keen interest in what motivates companies to merge and how mergers affect efficiency. A view holds that company's merger not just to obtain superior but also to be well-organized. It is argued that mergers allow the banking industry to take improvement of new occasions created by transformation in the technical and authoritarian surroundings. A dispute of this is the reduction in the number of banks countrywide but the concentration of power in local banking markets has not increased. The problems of under-capitalization, mismanagement and poor corporate governance have continued to be sources of instability and corruption in successive Pakistani banking crises up till now. Hence, mergers are singing a useful role in restructuring the banking industry with no risk and lack of opposition though, it collide on competence be worthy of attention. This research will consider this inspection by probing the effect of the merger as well acquisition that had taken place in the banking sector of Pakistan on the performance of a selected bank. 1.3 Objectives of the study

The reason of this project is to examine the overall impact of Banks mergers and acquisitions in the Pakistani Banking sector. This research also focuses on some issues:
Ø To explore the collision of merger as well as acquisition on bank effectiveness, profitability, enlargement and endurance. Ø To observe the impact of the merger as well as acquisition on the stage of competitiveness in the Pakistani Banking Sector. Ø To classify those which will give advantage and be defeated in the merger and acquisition procedures? Ø Does merger boost the capital base of banks?

Ø Does merger improve customer's service delivery in the area of information technology, innovation and boosting customer's confidence? 1.4 Hypothesis
The hypothesis with the intention of testing in this research is stated below as: H0: Merger and acquisition has not impact on the banks' performance in Pakistan h3: Merger and acquisition has an impact on the banks' performance in Pakistan 1.5 Significance of the study

The requirement for having a jingle economy and most especially disinfecting the banking sector; It is anticipated that this work will hold out a solution to the importance and recompense of merger and...
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