The Impact of Consolidation Forms on the Growth of Banks' Value
Prymostka L. O., Krasnova I. V., Lytvynenko O. K.

Prymostka, Liudmyla O., Krasnova, Iryna V., and Lytvynenko, Oleksii K. (2020) “The Impact of Consolidation Forms on the Growth of Banks' Value.” The Problems of Economy 4:334–341.
https://doi.org/10.32983/2222-0712-2020-4-334-341

Section: Finance and banking

UDC 336.71

Abstract:
The article aims at studying the banks’ value and managing it during consolidation in order to identify the relationship between the consolidation form and the growth of the bank’s value. The main consolidation forms are systematized and generalized taking into account global and domestic experience, which include the following: mergers, takeover, partial takeover, acquisition of assets, acquisition of specific assets, acquisition of fixed assets, acquisition of residual share, repurchase, recapitalization, exchange. It is noted that the choice of the banks’ consolidation form is determined primarily by the purpose of realizing the business interests of the parties to the agreement. The statistics of the scales of global M&A agreements by consolidation forms is given. 26901 bank consolidation agreements in various forms for the period from 01.01.1965 to 30.04.2019 in 146 countries have been analyzed. It is noted that the dynamics of M&A transactions in the banking business reached peak values in the period from the early 2000s to the end of 2010. It was during this crisis period (the crisis in the IT industry and the global financial crisis of 2007–2008) that 50 % of all consolidation agreements tool place. The country with the largest number of transactions is the United States, and the region dominating the sphere by the total volume of transactions is Western Asia. It is noted that each consolidation form is characterized by a specific set of factors that affect it. As a result, it is these factors that, as a result of the existing cause-and-effect relationships, shape the resulting bank’s value. Research has shown that there is a link between the forms of consolidation processes and the value influencing factors, and this link should be identified to better understand the banks’ value formation before concluding M&A agreements. It is proposed to expand the existing list of factors in research works in Economics, taking into account the business component of consolidation processes.

Keywords: bank’s value, consolidation, consolidation forms, factors, influence, merger, scale of agreements.

Fig.: 2. Tabl.: 3. Bibl.: 16.

Prymostka Liudmyla O. – Doctor of Sciences (Economics), Professor, Head of the Department, Department of Banking and Insurance, Kyiv National Economic University named after Vadym Hetman (54/1 Beresteiskyi Ave., Kyiv, 03057, Ukraine)
Email: priml@ukr.net
Krasnova Iryna V. – Doctor of Sciences (Economics), Professor, Professor, Department of Banking and Insurance, Kyiv National Economic University named after Vadym Hetman (54/1 Beresteiskyi Ave., Kyiv, 03057, Ukraine)
Email: krasnova_iryna@kneu.edu.ua
Lytvynenko Oleksii K. – Applicant, Department of Banking and Insurance, Kyiv National Economic University named after Vadym Hetman (54/1 Beresteiskyi Ave., Kyiv, 03057, Ukraine)
Email: Oleksii.lytvynenko@kneu.edu.ua

List of references in article

Damodaran, A. Damodaran on Valuation: Security analisys for investment and corporate finance. Wiley Finance, 2006.
Hooke, J. C. M&A: a practical guide to doing the deal. New Jersey, 2015.
Kouplend, T., Koller, T., and Murrin, Dzh. Stoimost kompaniy: otsenka i upravleniye [Company Value: Valuation and Management]. Moscow: ZAO «Olimp - Biznes», 2005.
Evans, F. Ch. Otsenka kompaniy pri sliyaniiakh i pogloshcheniyakh: Sozdaniye stoimosti v chastnykh kompaniyakh [Valuation of Companies in Mergers and Acquisitions: Creating Value in Private Companies]. Moscow: Alpina Biznes Buks, 2004.
Horbatiuk, L. “Rynok zlyttiv ta pohlynan u bankivskomu sektori Ukrainy: suchasnyi stan ta perspektyvy rozvytku“ [Market of Mergers and Acquisitions in the Banking Sector of Ukraine: Modern State and Prospects of Development]. Biznes Inform, no. 5 (2014): 352-356.
Ivasiv, I. B. Upravlinnia vartistiu banku [Bank Value Management]. Kyiv: KNEU, 2008.
Krasnova, I. V., and Nikitin, A. V. “Stratehichna reorhanizatsiia bankivskoi systemy Ukrainy“ [Strategic Reorganization of the Banking System of Ukraine]. Ekonomika syohodennia: aktualni pytannia ta perspektyvy, no. 2 (2013): 69-79.
Tsyhanova, N. V. “Tendentsii konsolidatsii bankivskoho kapitalu v umovakh finansovoi hlobalizatsii“ [Trends in the Consolidation of Bank Capital in the Context of Financial Globalization]. Aktualni problemy mizhnarodnykh vidnosyn, no. 117(2) (2015): 193-20.
Chub, O. O. Banky v hlobalnii ekonomitsi [Banks in the Global Economy]. Kyiv: KNEU, 2009.
Shulha, K. D. “Osnovni tendentsii ta osoblyvosti konsolidatsiinykh protsesiv na mizhnarodnomu bankivskomu rynku“ [The Main Tendencies and Details of Consolidation Processes in the International Banking Market]. Biznes Inform, no. 5 (2018): 329-333.
[Legal Act of Ukraine] (2008). https://zakon.rada.gov.ua/laws/show/514-17#Text
“Deloitte. 2019 Banking and Capital Markets M&A Outlook“. https://www2.deloitte.com/us/en/pages/financial-services/articles/banking-securities-mergers-acquisitions-outlook.html
KPMG. https://assets.kpmg/content/dam/kpmg/xx/pdf/2018/04/2018-banking-m-and-a-trends.pdf
Refintiv. https://www.refinitiv.ru/ru/financial-data/company-data
ENPS SurveyMonkey. https://www.surveymonkey.com/mp/net-promoter-score-calculation/
IMF World Economic Outlook Database. https://www.imf.org/external/pubs/ft/weo/2020/01/weodata