Cross-border mergers and acquisitions in the European banking sector

Although every M&A transaction is unique, there may be common drivers, problems and solutions to them.

The two cases describe the two major cross border mergers in the European banking industry over the last few years. The cases explain the rationale for these mergers and put forth the details of each merger. They analyze the motivations and key drivers behind them, identify the synergies and describe the problems encountered during the mergers.

As previously noted, many mergers and acquisitions are undertaken with the aim of increasing or protecting market share, maximizing shareholder value, deriving cost savings, improving economies of scale or generating new cross-selling opportunities. A number of additional factors such as the availability of substantial excess capital, the limited scope for further domestic consolidation, and growing competitive pressures at the global level are also an important driving force.

The cases clarify the important role that mergers and acquisitions play within the integration of European markets.
Economies of scale and economies of scope are regarded as the most important drivers for the execution of mergers and acquisitions. In addition to these cost-sided arguments, higher market shares as well as product-and risk diversity are particularly important.

Risks result, in particular, from the integration of different enterprise cultures and business fields, as well as from barriers to market entry. For instance, "natural barriers" are different cultures or different consumer preferences, while "politically induced barriers" are different national tax-legislation or different regulations.
Undoubtedly, the key to a successful merger is to take account of stakeholder interests. Employees need to know they will benefit as individuals whilst shareholders need to understand the rationale of the deal.