International Journal of Financial Management

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Early Warning Signals of Merger of Banks - A Case Study of Global Trust Bank (GTB) and Centurion Bank of Punjab (CBOP) in India


Affiliations
1 Fore School of Management, New Delhi, India
2 Jamia Hamdard University, New Delhi, India
     

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There have been many acquisitions of banks in the past either forced one or voluntarily. Many of acquisitions take place on account of the adverse financial position of the acquired bank. This happens over a period of time. There are enough indicators which can be perceived well in advance to indicate the financial health of a bank. The objective of this paper is to identify signals which may lead to future merger of a bank whether forced or voluntary. To identify these signals according to the CAMELS parameter through different variables, two cases i.e. the Global Trust Bank and Centurion Bank of Punjab were taken to study the health of these banks in pre and post acquisition stages. The paper presents an analysis of various financial parameters which indicated well in advance the deteriorated financial position of the bank leading to the merger of the bank at a later stage.

Keywords

Merger and Acquisitions, Failure, Early Signals, CAMELS, Net Interest Margin.
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  • http://rbi.org.in/scripts/publicationsview.aspx?id=10487

  • http://crisil.com/Ratings/Brochureware/News/ GTBOBC_020804.PDF

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  • Early Warning Signals of Merger of Banks - A Case Study of Global Trust Bank (GTB) and Centurion Bank of Punjab (CBOP) in India

Abstract Views: 410  |  PDF Views: 2

Authors

Kanhaiya Singh
Fore School of Management, New Delhi, India
Poonam Singh
Jamia Hamdard University, New Delhi, India

Abstract


There have been many acquisitions of banks in the past either forced one or voluntarily. Many of acquisitions take place on account of the adverse financial position of the acquired bank. This happens over a period of time. There are enough indicators which can be perceived well in advance to indicate the financial health of a bank. The objective of this paper is to identify signals which may lead to future merger of a bank whether forced or voluntary. To identify these signals according to the CAMELS parameter through different variables, two cases i.e. the Global Trust Bank and Centurion Bank of Punjab were taken to study the health of these banks in pre and post acquisition stages. The paper presents an analysis of various financial parameters which indicated well in advance the deteriorated financial position of the bank leading to the merger of the bank at a later stage.

Keywords


Merger and Acquisitions, Failure, Early Signals, CAMELS, Net Interest Margin.

References