Research Of The Overseas Mergers And Acquisitions Performance Of Chinese Commercial Banks

With the gradual relaxation of financial restriction and the popularity of high-tech around the world, commercial banks overseas mergers and acquisitions have become one of the most important methods to lower the cost of international expansion. Since China joined in World Trade Organization, the policies of "bringing in" and "going out" have been implemented. Under this background, domestic banks have also begun the road of overseas mergers and acquisitions represented by four State-owned commercial banks. How to expand markets and improve performance through overseas mergers and acquisitions is extremely helpful to domestic commercial banks.In the paper, China Construction Bank mergers Bank of American was chosen for the study of whether overseas mergers and acquisitions can improve the performances and how to improve it. The first part is to describe the international motivation theory of commercial banks mergers and acquisitions and the theory of mergers and acquisitions performance. Then the author concludes the motivations and basis. In the second part, the example of China Construction Bank mergers Bank of America was illustrated, not only included the relationship between two banks, but also strategic investment relationship before mergers and subsequent integration behavior.After the introduction of example, the author started the study by short-term and long-term performances in this case. For short-term performance, the points of shareholder wealth effect and dominant soft assets wealth effect were chosen to analysis the expectation in this merger as well as dominant soft assets wealth effect represented by consolidated goodwill and client list. The result showed that although investors were down on this case and the impairment of consolidated goodwill lowered the net income, the dominant soft assets existed positive economic effects and showed some potential. Speaking of long-term performance, based on the changes of return on equity and return on asset, the author divided this case to three stages to analysis:(1) before China Construction Bank mergers Bank of America,2003-2008;(2) the period from the above merger to China Construction Bank mergers United States international finance (Hong Kong) limited company,2006-2008;(3) the sequent integration,2009-2012. According to the different characteristics of each stage and the consolidation behavior of China Construction Bank, the author analyzed the China Construction Bank Asia financial performance from the profitability, asset management and risk resistance of competence. The results showed that China Construction Bank Asia’s consolidated financial performance is spiraling. Although bad in early consolidation, the late showed coefficient effects, then the financial performance had a huge progress.The conclusion was made that in this overseas mergers, short-term performance was not good, however, the long-term performance was surprising. Shareholders’wealth and banks’performance were both increased. Actually, it was a successful overseas merger and acquisition. Last but not least, this paper made proper suggestion to domestic commercial banks from this case:choosing proper object of mergers and acquisition as well as paying attention to post-consolidation.