Study Of Synergy Effect Of Financial Holding Company

I Background and significance of selecting such a themeIn the 1999, the United States adopted "Financial Services Modernization Act," allowing financial holding companies to engage in the form of relatively mixed-industry, such as banking, securities and insurance, and the Glass-Steagall Act established in 1933 was totally crashed. From then on, financial globalization and the deepening of the global financial industry have led to mixed-industry competition to expand profits and competitiveness becoming unavoidable trend.In this trend, our financial business and regulatory regime has no choice but to adjust. Maintain separate operation in the basic premise of limits unchanged, regulators began partial deregulation, through individual or joint manner approved and issued special approach, allowing banks, securities and insurance institutions operating in the field of cross-specific. It underlined the major adjustments in regulatory philosophy. The revised "Law on Commercial Banks" provides reserved space for the establishment of FHC and mixed-industry groups. At present, although the legal status of FHC in China has not been clearly defined, the FHC have in fact been existed.Today, most people have reached the agreement that FHC can bring us an amazingly huge profit through its synergy effect. However, dose this abstract, invisible effect is useful in the real operation? How can we design a series of rules to make it work, but the risk is still under control? Those problems exist indeed. What's more, there is no a consent result about the real effect of the FHC.Out of these problems that need to be solved as quickly as possible, and the strong emotion to form FHC inside China's enterprises, the author thinks it's necessary to research the issues and find them out. Now, there are many study and themes about FHC. Most of them focused on its system, legislation and supervision. The author decides to make a deep research on the synergy effect of FHC and do some profitable trying. The theme is selected on the basis of such a purpose.II Basic train of thought and main contentThe paper begins with the definition of synergy effect, and then thoroughly reviews the developmental process of synergy theory. This part wants to figure out three problems: what is synergy effect? Why enterprises always devoted themselves to mix-industry operation? And what's the difference about the synergy effect of mix-industry operation between common enterprises and financial companies? After that, the paper talk about FHC, elaborates the necessities and meanings of the existing of FHC from two aspects, the common enterprises angle and financial field. In the end, the paper discusses the practical issue of FHC in China. After combining international FHCs' practical experience in operation and specific business, the paper puts forward some useful suggestions about Chinese FHC to perfect the synergy effect and minimize the risk in the some time.III Main opinions and innovationi As a special enterprises, FHC possesses the advantages of mix-industrial operation, but also it can make use of some quality of finance industry to pursue the profit of M&A and maximize its synergy effect.ii In the end, the paper brings up some suggestions about cooperation and coordination between subsidiary companies, and they are divided into three parts, commercial bank and investment bank, commercial bank and insurance, investment bank and insurance.iii Until now, there are seldom reports and themes about the synergy effect of FHC. The paper chooses a special angle to research FHC and puts forward some useful suggestions.