Shinhan Financial Group (a)

The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions

The industry that I have chosen to analyze for this paper in the banking industry. The companies which I have selected to analyze are Bank of America & Southeastern Bank. Bank of America will represent as the example for the company who has acquired and merged with other banks, and Fresno Southeastern Bank will act as the example for the bank who has never merged with a larger bank in any form or has been acquired. Both these banks offer similar products to their customers, for checking and savings accounts to home and car loans. They both offer investment products as well. Bank of America has a lot more products on a larger scale due to the size of their company, and the mergers they have made over their history. They operate worldwide

During the late 1950s and early 1960s, several large corporations began acquiring other companies to diversify their operations. Diversification allowed them to offset their losses in a failing industry with profits from other unrelated, successful industries. Such phenomena caused

Scholars who researched The Financial Crisis of 2007-08 agree that bank deregulation starting in the early 1970’s a major contributor. The deregulation allowed for banks to increase in size by absorbing subsidiaries and allowed for banks to take more risks. Matthew Sherman dictates, “Many argued that consolidation in banking was an inevitable evolution and championed it as financial ‘modernization,’ but the changes posed

The integration phase is the final phase of a merger and acquisition. This is typically where managers underestimate the magnitude of issues. Problems arise due to over estimation of synergistic benefits, culture, and communication issues between departmental managers, employees, and customers. Culture clashes are a huge issue in mergers and acquisitions. From our research, we found many companies underestimate the severity of these clashes. Each company has its own environment and the smallest changes can upset a whole organization if it is not dealt with

In the United States, the bank served 27 million households and two million businesses and processed more checks per day than the Federal Reserve System. Globally, it boasted over 140,000 employees across 190 nations, over $8 billion in annual revenues, $360 billion in deposits, and some $600 billion in assets (see Exhibit 3 for key financial data). Yet, increasing competition ensured that Bank of America could not rest on its laurels. Like many of its successful peers, its growth had been driven by cost reduction and consolidation. From 1985 until 2000, the number of U.S. banks had dwindled from around 14,000 to about 7,000. These still large numbers—especially when compared with there being only six major banks in Canada— reflected the highly competitive nature of the U.S. banking industry as well as its regional focus. Driving consolidation had been a realization that while service was local, products were national. Despite this realization, however, banks continued viewing financial services as commodities, and this bottom-line orientation did not make for an industry rife with innovation. In the estimation of Butler, a senior vice president and industry veteran, “People’s expectations for banks are very low; in fact, they’re used to being

In 2007, the worldwide volume announced that mergers and acquisitions (M&As) had reached more than $4.74 trillion according to The Wall Street Journal. Despite their persistent acceptance, M&As remain highly debatable (Muehlfeld, Rao & Van Witteloostuijn, 2012). The constant debate about post acquisition performance repercussions of M&As (Rooney, Mandeville, Kastelle, 2013) points to important questions as to whether and under what conditions organizations learn from past acquisition experience. However, outside of operational backdrops, the effects of experience on learning as well as their outcomes have proved more intangible. Multifaceted environments as observed in typical corporate level executive and strategic activities prevent reinforced learning and diminish the identification between current actions and observed outcomes (Finkelstein S, Haleblian, 2002). Thus, it can take years to witness effective wisdom obtained regarding mergers between large organizations (Muehlfeld, Rao & Van Witteloostuijn, 2012).

Using project control processes to manage the risk and meet the project budget and schedule constraints provides ABI/FAFS with many opportunities. The training initiative gives ABI/FAFS the opportunity to increase the technical competency of the staff and better prepare them to take on future IT improvement projects which should be of particular concern at this time, since research shows that “mergers and acquisitions create considerable amount of stress among employees of the acquired firm, resulting in a negative impact on employee performance” (Brahma & Srivastava, 2007, p. 10). The training also can serve to improve employee morale and satisfaction. Successfully merging the two operations provides an opportunity to increase market share, revenues and profits. Bringing in modern technology gives ABI the opportunity to offer a wider array of online banking services to its clients with faster response times. Combining the ABI and FAFS IT staff on the project provides an opportunity to work together toward a

In the 1990’s both Korea and Taiwan had embarked the process of financial liberalization and maintained the momentum up

Management teams need to feature the necessary business departments, thereby ensuring a smooth transition. When two companies merge, the cultural differences coupled with the variation in corporate values have the capacity to affect the success of the merger. Therefore, it is pertinent to the success of the business venture to ensure that the potency of these variations is mitigated. It then translates to mean that the company needs to implement measures that enable accommodation of the differences between the pertinent firms. Such a measure can only be realized once the concerned departments are factored into the decision-making process. From these relevant departments, input gained will be instrumental in guiding the change process that will ensue (DePamphilis, 2011). The relevant departments may provide a unique understanding of the situation thereby enabling a much more efficient management of the merger.

Select a pair of organizations that have gone through a process of Merger and/or Acquisition (M&A), describe the culture of the organizations prior to the M&A. Provide examples that illustrate aspects of the organizational culture. Describe the process of M&A. Did the process succeed, if yes, please outline the reasons of success, impact, etc..? If the M&A did not succeed, why did it fail, impact, etc..? Give examples wherever appropriate.

The merger of BRL and Hardy had resulted in a change in the management structure in the new company. In cases of mergers, there are always some resultants

Leadership at Commerce Bank knew what it needed to do to be successful in the banking industry. They knew from the get go that they wanted to focus on differentiating themselves from competing banks. They wanted to compete on service rather than price recognizing that their prices weren’t always the best in the industry. Their corporate strategy was set around their customers having a positive, memorable, and consistent experience when they visit any of the Commerce Bank branches. They relied heavily on research to determine why customers left their financial institutions in favor of a competitor and they made it their goal to make Commerce Bank stand out from the rest. Commerce Bank capitalized on what other banks

Bank of America seems possessed of two, very nearly contradictory, management styles. On some level, this represents a transition for the corporation as it becomes larger and larger and must increasingly face the kind of problems only associated with corporations of its size. On the one hand, management at Bank of America seems to want to solve many of its problems; both legal and regulatory by simply throwing money at them. The chairperson and chief executive officer, Kenneth D. Lewis, has decided to resolve many of the company’s legal entanglements in this fashion to have them dealt with out of the public eye as quickly as possible (Boraks & Moyer, 2004). However, at the same time the Bank of America has spent considerable effort in expanding its physical assets through a series of mergers and acquisitions of other banking institutions, all the while cutting personnel to improve profit margins. Taken together these efforts (at

“ Concentration has made the financial sector more fragile by creating a few large institutions that dominate more than half of the sector. The top 18 banks currently hold about 60 percent of total assets with the top 4 holding about 40 percent (this is even higher than pre-crisis levels)—compared with only 23 percent of total bank assets in 1992. Further, as compared with 1992, these are now “universal banks,” permitted to engage in a wide range of financial activities, from commercial banking to investment banking and to insurance.