Research On The Financial Performance Evaluation Of China’s Commercial Banks’ Cross-border M&A

In the era of economic globalization,the global many large banks have started international operation,the cross-border M&A is an important way to many large banks into overseas markets.China’s commercial banks have a relatively short history of cross-border M&A,which began to develop steadily after the return of Hong Kong.The domestic and international situation after the financial crisis has provided a historic opportunity for cross-border M&A of China’s commercial banks.At the same time,in order to adapt to the new normal and accelerate the process of internationalization,China’s commercial banks have further increased cross-border M&A.While expanding the overseas market and improving the performance of banks,China’s commercial banks actively learn from foreign banks’advanced management experience and technological innovation ability to improve financial business innovation ability.In the process of cross-border M&A of commercial banks,how to complete the mergers and acquisitions with high efficiency and quality,how to help banks improve their competitiveness in the fierce international competition,and at the same time strive for more overseas resources and improve their profits are important issues of concern.This paper mainly evaluates the financial performance of Chinese commercial banks before and after the change of cross-border M&A.Based on the elaboration of relevant concepts,motivation theories and evaluation methods of commercial banks’ cross-border M&A,the summary of the status quo and characteristics of Chinese commercial banks’cross-border M&A,and the analysis the motivation of Chinese commercial banks’ cross-border M&A at this stage,it takes the acquisition of Brazil BIC bank by China Construction Bank as a case study.Firstly,it introduces the development status of both parties,and summarizes the M&A process in stages.Then it analyzes the M&A motivation from three aspects:the special significance of the Brazilian market to the Chinese economy,the demand for overseas development of CCB and the economic strength of BIC Bank.Secondly,the event study method is adopted to evaluate the short-term financial performance of this M&A case.The expected return rate model is constructed based on CAPM model,and the expected return rate of 30 trading days before and after CCB’s merger and M&A is calculated by using the return rate of Shanghai composite index.By comparing it with the actual return rate,the excess return rate and accumulated excess return rate in the short term after CCB’s M&A of BIC bank are obtained.The results are used to analyze the change rule before and after the M&A event.Principal Component Analysis(PCA)is used to evaluate the long-term financial performance of this M&A case.After learning from the experience of selecting evaluation indicators at home and abroad and fully considering the particularity of commercial banks,10 indicators reflecting the four abilities of banks are selected to build an indicator system for evaluating the long-term financial performance of banks.On this basis,the annual financial performance scores of CCB before and after the M&A event are calculated.The results are analyzed by vertical comparison of CCB’s own performance and horizontal comparison between CCB and BOC.The research shows that the short-term financial performance of CCB in this M&A event is good,while the long-term financial performance is not ideal.Since the delisting of BIC bank in Brazil,it has shown a trend of improvement.It can be seen that M&A decisions not only consider the single goal of profitability.Finally,the experience is summarized,and the enlightenment from the M&A area,M&A target and the timing of M&A and the formulation of integration strategy are provided,which provides some reference experience for cross-border M&A of Chinese commercial banks.