Benefits of Community Bank Merger and Acquisition by jacobwillis

VIEWS: 159 PAGES: 2

More Info
									   Community bank merger & acquisition has been found to have wonderful
 benefits for both the acquired banks as well as the customers. It also results in
 capital raising which is one more beneficial aspect of merger and acquisition.


       ver since banks have come into existence, they have been wonderful
       sources of loans for the customers, besides allowing them space and
       security for their deposits and savings. In the process banks have
       turned to be an extremely important in determining the conditions
of an economy. Talking about community banks, they usually have many
local branches for people to reach out to. These branches earn lucrative
business. In addition, they also play a vital role in delivering profits not only
to the shareholders, but also for the office employees, managers and
business owners. Community bank merger & acquisition naturally results in a
number of beneficial prospects including capital raising.
When a bank undergoes merger & acquisition, it has scopes to cut down
expenses and pass the savings on to the account holders as cheap products
or financial offers. What is even more important, banks can resort to merger
& acquisition in order to avoid getting bankrupt when it is running in loss.
There are other beneficial aspects of merger and acquisition. Let’s discuss the
benefits one by one.
Further Business Development
The most prominent benefit of community bank merger & acquisition is
business expansion. Banks usually have large number of customers. With
merger and acquisition banks have the opportunity to let the customers
open new accounts and buy cheap financial services. Thus they earn profit
which can be invested in opening new branches, real estate, employee
benefits and marketing/advertising. Apart from the merger, the acquired
bank also gains a lot.
Reduced Expenses
Community bank merger & acquisition naturally results in the creation of a
new bank identity. The most interesting thing about the emerging bank is
that it enjoys a significant reduction in expenses in a number of ways. The
insurance companies approach the new bank employees with attractive
financial offers and discounts since the employees are huge in number.
Besides, in the post-merging condition, the emerging bank can save the cost
for one or more departments. There is also reduction in the processing fees
for transactions.
Increased ATM and Branch Networks
With community bank merger & acquisition there is a growth of the
numbers of ATMs and branches. It’s needless to mention that more the
branches and ATMs, more the profit for the emerged bank. However, you
can also understand how the customers are benefitted. They can access
ATMs, no matter where they go. Besides, it is easier for the customers to get
a loan sanctioned by the merger bank. Since the merger banks have huge
deposits, risk factors are less in case of giving loans. They make the lending
conditions simpler and more flexible. It becomes even easier for the
customers to have secure credit cards.
Bankruptcy Prevention
As mentioned before, community bank merger & acquisition not only results
in capital raising, it also plays an important role in helping the bank avoid
bankruptcy. In case of bankruptcy, it’s not only the banking organization
that suffers the loss; the customers also suffer the same fate. Moreover, the
employees have the possibility of losing their jobs. However, when a larger
bank acquires the failing bank, it also takes possession of its assets. This
makes the shareholders happy. The employees of the failing banks are also
retained. Bankruptcy is thus avoided.

								
To top