Bank Cross-border M & A: Motivation, Performance And Policy Coordination

Cross-border merger & acquisition has been the major mode for the bank's internationalization. As the financial enterprise, bank's transnational M&A is the important part of the international investment and by means of M&A, bank has expanded to places all over the world and globalization degree of fictitious financial capital also has reached to an unprecedented level at the same time. The convergence of financial capital, with the industrialization centralized, must present the cross-border trend under the background of globalization and M&A provides the aptitude approach for bank industry's convergence in the whole world. Today, Chinese bank industry has already been entangled into the tidal of economy globalization and how can Chinese bank industry which has congenital development deficiencies and acquired malnutrition fight for survival authority, expand the development power, and seize the announcement right is not only an economic theory proposition with great historical significance, but also a very realistic topic in the economic practice.The demonstration mainline of this article is: based on the analysis of the course of bank's transnational M&A and summarize its characteristic, we research the mode choice of bank foreign investment. Then we focus on the M&A mode and select three aspects that is motivation, performance and policy coordination, to lucubrate with different views. In this course, we give emphasis to study the new phenomenon of cross-border in the developing country since 21st century. Motivation, performance and policy coordination have the unitive course in bank merger and acquisition. In this article we will use academic and empirical method we want to comprehend the bank's transnational M&A deeply. At last we'll research the motivation of China's bank cross-border investment and what feedback Chinese bank industry has for policy coordination of cross-border M&A. At the same time we also present the suggestion of strategic arrangement and path choice for our country's bank foreign investment.Many motivations drive the bank cross-border M&A, but the core is for the maximum advantage. In recent years, there are tow aspects for developing country's bank which participate in M&A. One is foreign banks merger developing country's bank under the condition of financial market open. Another is developing country's bank"going out"to merger other banks in the international financial market. In the new circumstance, there are special motivations interior and exterior reasons included for bank's transnational M&A in developing countries, in which the government not only inviting the foreign capital to improve domestic financial market but also promoting the domestic banks going out and exploiting the overseas market. When we discuss which factor influence the bank cross-border M&A, the empirical analysis which use the bank M&A data of Asian countries indicate that traditional model, gravity model, can't explain the bank transnational M&A and the distance between two countries doesn't the main factor for bank transnational M&A. The factors are GDP of the country, the sum of trade in bilateral country and the sum of foreign direct investment and so on can influence one country's bank cross-border M&A.In this article we study the performance of bank transnational M&A from two angles which are synergy effect and new institutional economics. We think that the performance of bank transnational M&A is determined by the synergy effect in the M&A course and the key process is conformity after the M&A deal. We also discuss the computational method for synergy effect and offer the quantitative technique for the research of bank M&A synergy. From the view of new institutional economics, it's the dynamic reflection which comes from the variety of bank's boundary for getting the performance of bank cross-border M&A. So it results in the acquired decision that comes from bank governance structure, bank framework and asset specificity for bank M&A synergy. We also offer an empirical analysis about bank cross-border M&A and we select The Royal Bank of Scotland (RBS) as the research sample and use the"Return on Equity"model to analyze the bank's financial index. It indicates that M&A improves some banks'performance while receive the big risk.In view of bank cross-border M&A have been full of risk and in the age of globalization the effect of bank transnational M&A is growing. Such as stabilify the international financial order and adjust the international financial structure. So in this article we research the international coordination for bank transnational M&A after the study of motivation and performance.In this article, we research the aspect of international coordination for bank transnational M&A by the view of international competition policy. We analyze how to exert the international cooperation and policy coordination for bank cross-border M&A. Economics theory, jurisprudence theory and international political economy theory are the main theory foundation for us to research the policy coordination of bank cross-border M&A. In the article we conceive the Basel coordination mode under the International Competition Network (ICN) and make the international cooperation contact with international competition coordination. We hope that in the new framework we can decrease the competition conflicts which come from bank's transnational M&A by international financial supervision and international investment criterion.Based on the analysis of former discussion we begin our research on Chinese bank industry and we'll discuss how Chinese bank go out to M&A. Actually, Chinese banks'foreign investment occurred under two factors which are external pressure and enhancing internal strength. During the competition with international banks Chinese banks are suffering the stratagem change which is from"inviting in"to"going out". So we design the path for Chinese banks'FDI especially, using the M&A mode which including how to chose the merger opportunity and how to control the M&A risk. At last with the fact that Chinese banks have already been participated in the international bank competition we also analyze the impact that policy coordination and give some countermeasures for Chinese banks which must be in the face of the international policy coordination.