The Research Of Our Country's City Commercial Bank M & A

As a component of China's financial system, city commercial banks have been developing well in the thirty years since China set up its first city bank in Luohe (in Henan Province) in 1979. Both asset size and market share of city commercial banks keep increasing, and the financial status has got better fundamentally after the movement of saving reorganization. To complement the vast blank left by large banks, city banks have been expanding to counties in recent years. However, in the process of development, our city commercial banks have exposed their weakness in dealing with non-performing assets, staffing, system construction, building image, innovation and administrative mechanism. Considering their regional restriction, city banks are under big threat when they confront the fierce competition from banks at home and abroad. In order to survive and develop, city commercial banks have to pursue reform and innovation.Based on the general theory of banks' M&A, this paper analyzed the problems in the history and present status of our city commercial banks. By summarizing the present situation and characteristics of our city banks'mergers and acquisitions, the author found that horizontal M&A and combination of inner and outside are the main form of our city banks'M&A. In the process of city banks'M&A, government is the most important external driving force, but not a totally executive order. A strong inner requirement which exists in the process of city banks'M&A makes the purpose of the mergers diversified and their methods market-oriented.As a result, the author thought that M&A is not only necessary for the sustainable development of city commercial banks for the need of survival and development of urban commerce, development and prevention of financial risk, improvement of core competitive strength, implementation of intensive management, pursuit of maximum benefits and improvement of corporate governance's structure, but also feasible in both good macro and micro economic environment, which has been proved by the supportive policies, motivation from various fields, and the easiness of the process itself.The paper also analyzed the principals, methods and steps of M&A in exploration of the way to implement city commercial banks'M&A. Not only did the paper explain the general process of banks'M&A, it also came up with several key steps of the process which should be paid more attention. In the end, the paper listed some notes relating to several practices of China's city commercial banks M&A.