Strategists or lemmings?

Article Abstract:

Consolidation in the banking industry is driven by rational factors as well as irrational forces. The rational drivers of the current wave of bank mergers and acquisitions include the lifting of Glass-Steagall restrictions on interstate banking, the strong performance of bank stocks and the extremely low level of interest rates. The irrational factors behind the ongoing merger frenzy are topped by the tendency of bankers to follow the lead of their competitors. Some of the flawed theories underlying this 'group think' are that 'bigger is better' and that consumers want one-stop banking. Bank managers face the challenge of distinguishing between rational and irrational motivations for bank mergers. Since most studies show that acquisitions usually do not create value for the acquirer's shareholders, bank executives must make certain that they are entering merger deals for the right reasons.

Bank mergers

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Bank performance 1998: trouble ahead?

Article Abstract:

The banking industry is anticipated to face a number of issues which will affect their growth and performance from 1998 and beyond. Credit quality is expected to be affected by normal late loan pricing pressures and the Year 2000 computer crisis. Small to mid-sized banking firms are also anticipated to be hit hard by factors influencing economies of scale issues such as technological changes. However, banks are urged to be on the look-out for revenue opportunities resulting from technology trends and the lowering of industry barriers. Bank managers are also encouraged to tackle multi-faceted issues affecting the safety and soundness of their company's operations. They are urged to analyze issues associated with investment appraisal processes to bring about growth in earnings per share.

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The focused view

Article Abstract:

New technologies are changing the playing field for banks in the area of trade finance. Technologies such as the Trade Card system and Bolero initiative are threatening the position enjoyed by letters of credit as the globally accepted payment method for international trade. Large banks such as Citigroup, BankAmerica and Chase Manhattan Corp have an edge in responding to the demand for new technologies since they posses the resources to do so. However, mid-size banks such as Comerica Inc, Mellon Bank Corp and Huntington Bancshares Inc must weigh their options more carefully. They must determine whether they want to remain in the trade finance business and in what capacity. Their business models should also target specific customers.

Finance, International trade, Electronic funds transfer systems

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