An Empirical Study on Merger Synergy of Financial Holding Companies.

• Main Authors: Wen-hsing Shen, 沈文興
• Other Authors: Cher-min Fong
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/91082626011885683805

碩士 === 國立中山大學 === 企業管理學系研究所 === 94 === After the promulgation of Financial Holding Company Law at the end of year 2001, the law has liberated the limitation of operations across banking, brokerage, and insurance. In order to cope with the future market competition, these institutions formed in total of 14 financial holding companies (FHCs) through self raising, merging, or acquisition. This research is aiming at the 14 FHCs and their subsidiary banks, security brokerages, and insurance companies, through applying financial ratio analysis to measure the synergy of FHCs’ merging and acquisition. The sources of synergy are divided into three dimensions : operations, markets, and finance. A total of eight years of financial data is collected, including two parts: four years of pre-founding of FHCs from 1998 to 2001 and four years after founding the FHCs from 2002 to 2005. In-depth interview is conducted to look for the differences of operation performance and effect of increasing shareholder wealth after the FHCs merging and acquisition. The conclusions of this study are presented as following： 1.Market Synergy Dimension: The revenue increased after founding the FHCs shows that the market synergy exists and fits to expectation. FHCs could operate across fields including banking, brokerage, and insurance to provide cross selling chance for finance products. 2.Operational Synergy Dimension: The operating costs and operating costs ratio are increased after founding the FHCs. Because the FHCs do not reach the economy of scale, the unit operation cost is high and the organization of FHCs becomes large and needs more communication, which makes the decision making process inefficient, the management efficiency still needs to be improved. 3.Financial Synergy Dimension: The profit after tax and ROE are decreased after founding the FHCs, which are mainly contributed from inefficient use of financial resources and human resources as a whole group. 4.Synergy was hard to be seen within short term, which needed three to four years to make it possible. After merging or acquisition, FHCs need some time to reduce the conflicts between its subsidiaries and to conduct more efficient resource application to form FHCs synergy. 5.Market Evaluation: The market value of whole FHCs increases which increases the shareholder’s wealth. This research provides the solution for increasing operation costs, including the following three points: 1.Converging the operation process. 2.Increasing economy of scale. 3.Enforcing the management efficiency.