The Study of Merge and Acquisition Strategy and Its Effectiveness of The Financial Holding Companies in Taiwan: The Case of Taipei Bank and Fubon Bank

The Study of Merge and Acquisition Strategy and Its Effectiveness of The Financial Holding Companies in Taiwan:
The Case of Taipei Bank and Fubon Bank

Abstract

The article firstly addresses the banks’ theoretical motivation of merge and acquisition activities based on the collected information. Secondly, it shows some of the academic researchers’ results of their studies on worldwide banks’ merge and acquisition activities in order to understand its effectiveness. Finally, the article uses the case of Taipei Bank and Fubon Bank’s merge and acquisition as an example to observe and analyze the effectiveness of the two banks before, during and after their integration. The important conclusions are drawn as follows:

1) Based on the average scores of the six key business indications for the last three years before the integration, the high and low scores of both banks indicate that Taipei Bank and Fubon Bank may potentially complement each other, therefore the merge and acquisition may benefit for both.

2) The acquired Taipei bank has suffered a gradual loss of some business advantages during the first two years of the integration. On contrary, the merger, Fubon bank, has gained business advantages from the merge and acquisition.

3) After the integration, Taipei Fubon Bank’s performing and financial ratios surpass the majority of the banks’. In addition, Taipei Fubon Bank’s main business growth rate that suffered a serious decrease during the period of integration has increased significantly, which is now far beyond the average growth rate of all banks.

The effectiveness of merge and acquisition has started to show gradually, yet whether it will last for as long as we can expect is still questionable.