The Merger And Acquisition Of EU Bank And Its Enlightenment To China

With the development of financial globalization and integration of economy, a new round of merges and acquisitions (M&A) start up with banks as the principal part of the activities since middle of 1990s, Numbers and dimensions of banks participating in M&A both perpetual increased not only in USA, and Japan but also in the EU. EU specially kept ahead in the world during this global M&A. EU banks M&A began from beginning of 1990s, and reaching the climax in 1998. EU banks M&A processed in particular time background along with course of EU financial globalization. Thus, both EU and members financial authorities tried to accelerate banks M&A through formulating measures and making assistant policies. In addition, during this time, the extension of EU banks M&A were not confined domestic nation, and extending to other countries, which constituted cross-border M&A. In this condition, many large international banks emerged. At the same time, banks consolidated with security company and insurance company, which leaded to the emergence of the conglomerate in EU.The bank M&A has not formed the major tend in China at present because of various reasons, but the bank M&A still can be regarded as an effective way which solves a great deal of contradictions in domestic bank and develops bank even faster. Exactly proceed from this point, this article probes into the bank M&A of China. The schedule that China opens the financial market and the bank participates in international competition is urgent day by day after China joins WTO. And at present, the system reform of bank of China has not finished yet, the organization structuring of the bank is repeated seriously, the trade expenses cost is very high, the management efficiency is low, the international competitiveness is weak. According to the agreement reached by China and WTO, our financial market will be completely opened to the world during five years. Here comes the deadline. Domestic commercial banks have to face the challenge from foreign banks is of far-reaching significance to speed our finance structural reforms and to optimize resources allocation so as to meet the challenge from WTO and promote our economy increasing.This paper is composed of three parts:In the first part, here are some basic theory about banks M&A. This is the foundation of this paper also the basis of activities of banks M&A. It includes three theories. First is industrial economics, include : Marshall's Dilemma,"Structure-Conduce-Performance", the emerging theory of industrial Economics, partial equilibrium model and general equilibrium model. Second is Marx's theory of capital, pursuit of surplus value and profit is the reason of capital concentration. Pursuit of surplus includes the pursuit of absolute surplus value and relative surplus value of these two different ways. Capital in order to achieve greater profits, the capitalists seeking for an absolute or relative value of the surplus value have two ways one is to expand the scale of production, another is increasing labor productivity, lower labor costs. The third is some major theory of bank mergers in the west. Market Power believes that the main motivation of mergers and acquisitions is competitors can be reduced through mergers and acquisitions. thus increase their control of the operating environment, increase its market share; theory of Efficiency believes that the M & A activity can improve the efficiency of business operations, and to increase social welfare, improve enterprise performance through mergers and acquisitions with a major role in the principle of economies of scale. Efficiency includes Differential Efficiency, Pure Diversification and Undervaluation.The second part mainly discusses the EU banking M & A from the EU M & A of Banks status, motivation and characteristics. Bank M & A make the EU bank's a higher position in the international banking, as well as strengthen the competitive ability and efficiency of the European banks. The mainly characteristics of EU banking merger is that their banking merger based on the economic integration and the currency integration as a powerful impetus. The promulgation and implementation of European financial market integration Act, the emergence of the euro, promote cooperation between the EU banking sector. M & A is not only to seek the domestic monopoly, pay more attention to the region's dominant in EU, form the all EU group. EU banks' transnational M & A accounted for bank M & A in the proportion is much higher than other countries or regions. mainly in EU's internal transnational M & A. Mixed mergers outstanding. From the motivation we can see that development of science and technology is the technical support of M & A. Bank growth strategies is the main motivity. The M & A of enterprise promote the banks'M & A. The government and the laws create a favorable environment for mergers and acquisitions.The third part of his inspection tour is majored in China's bank merger, find out the inadequacies from the current situation of our banks. Chinese banks' capital adequacy rate is generally not very high. They're in a backward position compare with the international bank, especially the ratio of non performing loan is on the high side. Also, the profitability and efficiency is low. After the WTO five-year transition period, the entry of foreign banks will bring about a strong impact on China's banks, not only for profit or not, but also the challenges to survive. Under such circumstances, China's banking reform is imminent, and from the successful experience of the EU to China, merger of China's bank is a good way to solve the problems. And to find the feasibility method of China's banking merger from the successful experience from the European Union.