Implication of mergers and acquisitions on finanaical position of selected banks

In today's globalized economy, competitiveness and competitive advantages have become the buzzwords, for corporates around the world. Companies are increase singly using Mergers and Acquisitions (M &A) mainly for entering new markets aiming asset growth, garnering greater market share/additional manufacturing capacities, and gaining complementary strengths and competencies, and to become more competitive in the market place. M&A are not to the Indian banking sector. Between 1961–2004, 71 merges took place among various banks in India. Mergers and acquisitions are used for improving competitiveness of companies and gaining competitive advantage over other firms though gaining greater market share, broadening the portfolio to reduce business risk and entering new markets. There is variation in terms of impact on performance following mergers, depending on the firm acquired – domestic or cross-border. In particular mergers have had a positive effect on key financial and operational performance of firms acquiring domestic firms while a slightly negative impact of the firms acquiring cross-border firms. Therefore an attempt is made in this article to evaluate the performance of acquiring banks based on comparing key financial position indicates before and after acquisition period of 5 years. The researchers has used accounting ratios metric viz., liquidity ratios, activity ratios and profitability ratios to elicit financial position of the banks during pre and post acquisition periods. This will help to asses the implications of M&A on the financial position of acquisition bank in the deal.