Accenture Cross Border Banking

Cross-Border Banking

By Bruce Kiene, David W. Helin and Brad Eckerdt

An Accenture Study of Cross-Border Mergers & Acquisitions in Banking

Introduction

As banks prepare for life in the post-recession world, they once again are turning their attention to mergers and acquisitions as a way to reignite growth. Many banks are hopeful that M&A will allow them to enter new markets, as well as acquire new customers for product and service expansion. And for many institutions, such deals increasingly will involve investing in new partners in other countries. However, as they pursue crossborder deals, banks will face considerable complexity, not to mention heightened risk. Thus, it is important for these institutions to understand the factors that are critical to executing a deal in a way that minimizes risk and generates sustainable, long-term financial value for the acquiring bank.

2 | Cross-Border Banking

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A Study of Cross-Border Deals

To help shed light on these success factors, Accenture recently analyzed 89 publicly announced cross-border deals in the banking industry between 2000 and 2009. Financials for acquired bank companies were sourced from financial statements either published originally by the company or filed by the bank with the local bank regulator.1 Seventy percent of the deals studied were majority deals, while the remainder involved minority stakes (i.e., a one-time investment of less than 50 percent).

Accenture’s research measured the impact cross-border deals have had on the acquired bank by considering the long-term financial performance of the target, beginning with the fiscal year after the deal was completed and spanning a period of years following deal completion (through fiscal year 2009). This approach provided deeper insight into success attributes for each deal, as well as the factors that correlated most strongly with long-term success or failure. Notably, many of the analyzed deals spanned the period leading up to the...