Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

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
     

   Subscribe/Renew Journal


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.
Subscription Login to verify subscription
User
Notifications
Font Size

  • Burton, A. A., & Cliff, J. H. (1987). Forecasting banks failure: A non-parametric frontier estimation approach. Applied Economics, 19, 1291-1302
  • Gunsel, N. (2007). Financial ratios and probabilistic prediction of bank failure in north Cyprus. European Journal of Scientific Research, 18(2), 191-200.
  • Kakani, R. K., & Mehta, J. (2006). Motives for merger and acquisitions in the Indian Banking sector. A Note on Opportunities and Imperatives' in SPJCM working paper: 06-13
  • Liu, T. K. (2010). An empirical study of firm's merger motivations and synergy from Taiwanes banking industry. International Research Journal of Finance And Economics, 38.
  • Mannasoo, K., & Estonia, B. (2005). How to measure the early signals of banking fragility. working paper no 8.
  • Richard, J. C., James, V. K., & Robert, N. F. (2011). The bank failure, economic conditions statues in the U.S, 1970-2009. Atlantic Economic Journal, 39, 39-46.
  • Richard, J. C. (2010). Determinants of bank failure in US revisited. Applied Economics letters, 17(13), 1313-1317.
  • Richard, S. B., Lawence, M. S., & Thomas, F. S. (1994). Early warning indicators for Norwegian Banks: A logit analysis of the experiences of the banking Crisis. Recherches Economiques de Louvain, 60(4).
  • Srinivas, D. K. (2010). Pre merger and post merger performance of merged banks in India - A select Study. Indian Journal of Finance.
  • Tiwari, A. K., & Grover, M. (2010). Mergers and acquisitions in indian banking industry-A case study. Mangalmay Journal of Management & Technology, 4(2).
  • Wheelock, D. C., & Wilson, P. W. (2000). Why does bank disappear? The determinants of U.S. bank failures and acquisitions. The Review of Economics and Statistics, 82(1), 127-138.
  • http://rbi.org.in/scripts/publicationsview.aspx?id=10487
  • http://crisil.com/Ratings/Brochureware/News/ GTBOBC_020804.PDF
  • http://www.banknetindia.com/banking/gtb5a.htm
  • http://rbi.org.in/Scripts/BS_PressReleaseDisplay. aspx?prid=18320
  • http://www.hdfcbank.com/htdocs/common/pdf/CBOP_ merger.pdf

Abstract Views: 419

PDF Views: 2




  • 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: 419  |  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