Study On The Performance Of Mergers And Acquisitions In China’s Banking Industry

Since the 21 st century, with the further development of liberalization and globalization of the world economy, the sixth wave of mergers and acquisitions has appeared. In addition to electronics, communications, as well as chemical and other traditional industries, a massive wave of mergers and acquisitions in banking industry has becoming more and more active. Along with the global financial liberalization and financial deregulation, foreign banks represented by the United States, Europe and Japan have established financial supermarket through large-scale mergers and acquisitions activity with their strong power. By this way, they could provide comprehensive and diversified financial products and service for domestic and foreign customers, continually improve their core competitiveness and international competitive advantages. Mergers and acquisitions have become a driving force and an important way to promote the development of modern banking.As the main body of financial industry, the banking industry plays an important role in promoting the economic development, and the healthy development of banking is critical to the stability and security of countries’ financial system. M&A in banking can not only cope with increasingly fierce competition of domestic and foreign banks, continuously improving its industry status, but also realize the financial industry integration effectively, improve the efficiency of financial resources allocation, and strengthen financial industry’s international competitiveness. China, as a backbone to promote the development of the global economy, has become increasingly active in overseas and domestic M&A activities in recent years, both the number of transactions and transaction amount reaching new peaks. The completion of M&A process is just the beginning of M&A of banking; the result of the completed transaction is more related to the success or failure of M&A of banking. After integrating the resources of both sides, a successful M&A of banking can not only improve the economic benefits of the bank, but also play an important role in reducing and decentralizing management risk, improving the management efficiency and prompting the banks themselves to pay attention to the long-term strategic development.This paper first reviews the domestic and foreign literature, then explains the M&A motivation and elaborates the evaluation methods of M&A according to the synergy effect theory, scope economy theory and market forces theory. Finally based on summarizing and analysing the existing bank performance evaluation systems, the performance evaluation system of M&A in banking has been established. Taking the M&A case of Shenzhen Development Bank by Ping An Insurance Group for example, which has been the biggest financial merger in our China’s financial history, this paper interprets the cause and effect of the case, and measures the M&A performance of this case by the performance evaluation system of M&A in banking. Finally, this paper summarizes the whole case, extracts the advantages and disadvantages of M&A, and puts forward the suggestions for the improvement of China’s banking industry M&A performance from the research conclusions and revelation. The aim of this paper is to establish a comprehensive performance evaluation system of M&A in banking and provide a reference for our country bank mergers and acquisitions, which will may have a certain significance for M&A of the domestic banks in the future.