International Journal of Applied Research
Vol. 3, Issue 1, Part A (2017)
Mergers in Indian banking industry-A case study on ICICI bank and Indian Overseas bank
Mergers and acquisitions are the revolution strategies to restructure a business where the competitions are reduced and existing markets are protected. In the recent years Indian Banking industry had also adopted the strategies to increase the market share of the business and to control the competition. The study is an effort to analyse the financial performance and shareholder value of the select banks. The share holder value of the select banks are calculated through economic value added (EVA) tool. The performances of the banks are measured with profitability and productivity ratios. Paired t-test is used for testing the statistical significance of the ratios of the select banks. Mergers help banks to strengthen their financial base to expand their operation and reduce their cost of operation. The study covers a public sector bank and a private sector bank which were involved in merger during 2006-07 and 2010-11 respectively. The results suggest that banks had improved efficiency and increased the shareholders value through strategic mergers. Required data were collected from the Capitaline Plus Database. It was found that the in post merger period there is increase in the economic value added of the banks under the study.