Expansion and Merger

Expansion and Merger

Government Regulation in Bank Merger

The success of any merger depends on a high degree of process followed, no single process that ensured in all cases, i.e., recognizes the importance of not facing a merger without having planned and coordinated the activities needed to carry out, however appropriate to note that not all realities are equal and this situational approach that determines the absence of a model only. Bank mergers can be very beneficial to the national financial system, as long as they are part of a strategy by the state, seeking to guarantee the stability and healthy growth of it, without involving an increase in rates sustained profitability at high risk, which ultimately would lead to mergers and hostile takeovers forced the banking institutions that operate under rules and regulations of the monetary authorities and supervisory country's banking system.

When two companies merge initiate a process of transformation must therefore carry out this process from the perspective of the management of change. We found several elements of the Theory of Change Management that are applicable to the processes of mergers, which will be set forth below. The first point to make is that there is a basic difference between most of the efforts to change management and change in mergers. The planned change efforts involve moving an organization from a known past to a future known, or at least planned. The change induced by a merger or acquisition means moving from a known past to a future essentially unknown, either because at the time of the agreement there are no detailed plans or because they are incomplete (Polski, 2003). The future of the merging organizations can be perfectly clear to the stakeholders actively involved in the process, yet few people know acquiring the firm's future plans, while the acquired firm can be a complete mystery.

Threats and Complexities

Emerging markets have some of the features and functioning of legislative regulation, which leads to certain difficulties in the process of mergers or acquisitions of banks, both within the same country, and the absorption of local banks by foreign financial institutions. The main barriers to takeovers of banks and other financial institutions, an emerging market can be grouped as follows: structural, technical, informational and cultural.

The structural barriers include state regulatory barriers, as well as infrastructure. State barriers are, for example, the strong influence of the supervisory boards with representatives from the state. This type of barrier can be attributed, on the availability of stock with unequal voting rights, thus, the profits distributed by the bank for the benefit of shareholders, in the case of a foreign shareholder is subject to three times as a bank profits a tax on profits as a dividend-tax income of foreign persons in the country of incorporation of non-resident tax on the income, in countries which have not concluded an agreement on avoidance of double taxation (Rezaee, 2001).

The structural barriers include weak, buggy regulation of financial markets. The main areas of law, insufficiently developed for this group of markets are ...