Cross-Border Bank Mergers and Acquisitions in the EU

Abstract

Beginning at the end of the 1990s the banking industry entered into a new phase of consolidation. The US market is experiencing an increasing number of inter-state bank mergers and acquisitions, whereas cross-border mergers between banks in different countries are becoming ever more common in the EU. This paper examines the motives and gains from large cross-border bank mergers by using what has been called a 'balanced scorecard approach'. It assesses firm performance by using both financial and non-financial (strategic) variables. The paper is explorative and covers a select literature review of bank mergers and acquisitions in general and an analysis of the Nordbanken-Merita merger based on the balanced scorecards approach in particular. It is shown that the balanced scorecard may be a very useful technique to analyse the complexity of large cross-border bank mergers and thereby it adds to our over-all understanding of bank mergers across borders. Furthermore, we demonstrate how the growth strategy behind the merger of the two banks may be organised within the framework of a balanced scorecard highlighting the strategic fit between them. Our findings imply that the strategic fit was of a complementary nature. The banks were completing each other rather well in the different perspectives of the model. The success of the merger will therefore very much depend on the capability of cross-utilising the different characteristics and strengths of the merging banks.

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