THEORETICAL AND PRACTICAL ASPECTS OF BANKS’ CONSOLIDATION

  • Оlena Bereslavska
Keywords: bank consolidation, mergers and absorptions, M&A market, foreign capital, banking system

Abstract

The article deals with the issues of bank consolidation through mergers and acquisitions. Based on the analysis of publications of foreign and domestic scientists, the motives and goals of bank consolidation were determined. It has been found that the main motive behind the merger and acquisition process is to obtain a synergistic effect, which is reflected in the qualitative and quantitative indicators of banking activity.
It is justified that the process of bank consolidation is always carried out in the context of the trends observed in the national and world economy. The crisis situation of the economy as a whole, and of the banking system in particular, contributes to the bankruptcy of both small and large banks, which stimulates them to merge and absorb. It is noted that the peculiarity of the process of bank consolidation after the 2008 crisis was the merger and acquisition with the participation of the state, i.e. full nationalization of banks or the acquisition by the state of a strategic stake in financial companies.
The subject of the article covers the study of the positive and negative effects of the forced consolidation of banks, which some countries have resorted to.
It is concluded that in Ukraine the active phases of the banks' mergers and acquisitions took place in the context of two significant trends in the banking sector. The first is related to the rapid development of the banking market and the emergence of foreign capital. The second one is with the crisis of the banking system and the rapid outflow of foreign capital.
 It is determined that overcoming the crisis in the country's economy and the banking sector creates conditions for the resumption of foreign investment inflows. The banking sector remains the most attractive for mergers and acquisitions alongside industries such as agriculture, innovation and technology, and the insurance market.
It is substantiated that the intensification of the bank consolidation process will be facilitated by the macro-financial stability and economic growth observed in the current year and the large potential of lending to small and medium-sized businesses. It is necessary to solve the problem of "bad" loans (NPL) in the banking system as a whole, which hinders the activation of mergers and acquisitions agreements.

Published
2019-09-28