Pyrrhic victories?

Article Abstract:

Bank mergers and acquisitions in 1997 set a new record in deal prices. According to SNL Securities LP, bank-related mergers during the year amounted to $73.6 billion. First Union Corp engineered the most expensive acquisition in American banking history with the $17 billion takeover of CoreStates Financial Corp. Other high-profile mergers in the banking industry include those between NationsBank Corp and Barnett Banks Inc, Wachovia Corp and Central Fidelity Banks Inc and Banc One Corp and First Commerce Corp. However, the economics behind these megamergers are subject to debate. A study by Keefe, Bruyette & Woods Inc found that the internal rate of return on some bank mergers are lower than expected. In addition, investor concerns resulted in declines in stock prices of some acquisitive banks such as First American Corp, Wachovia and NationsBank.

Mergers & Acquisitions, Analysis

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The revenue chase

Article Abstract:

Banking institutions have become extremely efficient in cost cutting initiatives when it comes to acquisitions of other firms. Yet they typically reward the target acquisition's shareholders rather than their own investors, leaving the latter shortchanged. This suggests that bank acquirers have neglected to actively pursue revenue synergies in consolidations that are an essentially different and more problematic exercise than cutting costs. Achieving revenues synergies requires decisions from banking customers. Managers can improve revenue synergies by employing the launching marketing promotion targeting prime clients, leveraging area coverage, segmenting/optimizing price/volume tradeoffs, temporarily constricting product features to quickly achieve system integration and nurturing the acquired firm's growth culture.

Business Methods, Management, Business planning

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Rethinking antitrust

Article Abstract:

Changes in federal antitrust policies are necessary due to the advent of electronic banking and commerce. Antitrust laws are silent regarding issues on joint ventures and alliances between banks and nonbank high technology firms. These include issues such as distribution agreements and electronic currency. To avoid the slow process of reform through antitrust legislation, policymakers can utilize various steps. First, the process of identifying possible competitors in a particular market can be widened by including out-of-market electronics firms. In addition, new analytical tools for examining new types of competition created by electronic commerce should be developed.

Interpretation and construction, Laws, regulations and rules, Antitrust law, Electronic commerce, E-commerce

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