Impact of Mergers in Banking Sector: A Case Study

International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue VII, July 2018 | ISSN 2321–2705

Impact of Mergers in Banking Sector: A Case Study

Nagalekshmi V S¹, Vineetha S Das²

¹Research Scholar, Department of Mechanical Engineering
APJ Abdul Kalam Technological University, College of Engineering Trivandrum, Kerala, India
²Associate Professor, Department of Mechanical Engineering
APJ Abdul Kalam Technological University, College of Engineering Trivandrum, Kerala, India

Abstract- Merger, consolidation of companies or assets through various financial transaction provides the survivor organization growth along with competitive advantage in terms of technology, market share, infrastructure etc. It optimizes allocation of resources and improves efficiency of organizations. This work analyses the effect of mergers on Indian banking sector by considering the pre-merger and post-merger financial performances of Kotak Mahindra and ING Vysya banks that undergone merger. Secondary data as available from NSE website, annual report of the respective banks and other web based data sources were used to draw conclusions regarding the effect of the corporate event. The banks considered here are equally strong and well managed by competent professionals. The effect of this merger is primarily the growth of this survivor which gained the fourth position among the players in Indian banking sector. This analysis reveals that the corporate action is positive except in the case of non-performing assets which shows an increased trend compared to the post-merger results of Kotak Mahindra bank.

Keywords: Mergers, impact, performance indicators, asset quality, non-performing assets.

I. INTRODUCTION

Mergers are business strategy actions that are essential to provide an organization external progression and aid them reasonable benefits. Mergers can improve a company’s competitiveness by gaining extra market shares.The huge numbers of corporate rearrangements taking place, particularly in the last couple of years is due to the downturn taking toll of many Indian businesses and the feeling of uncertainty surging over our businessmen. For this reason, a number of companies have been taken over and several have experienced internal restructuring, whereas some companies in the similar field of business have realized the advantage of coming together into a single entity. In this background, it would be worthwhile to study the effect of these corporate actions considering the deal of Kotak Mahindra and ING Vysya banks. This paper tries to unearth the effect of the corporate movement in Indian Banking sector.

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