Banks M&A: Strategy and Valuation

Alessandro Santoni and Federico Salerno
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Alessandro Santoni: European Central Bank
Federico Salerno: European Central Bank

A chapter in How to Value a Bank, 2023, pp 45-57 from Springer

Abstract: Abstract Valuing a Bank in an M&A scenario can be challenging, and several factors and points of views would need to be considered. The starting point of an M&A valuation can be the traditional methodologies used for valuing a Bank in a normal scenario. In this chapter, we investigate some of the critical aspects of a Banking M&A and the valuation implications from two points of view: the shareholders’ point of view and the supervisors’ point of view. From the shareholders’ point of view, the key aspects to be considered are the calculation of the synergies arising from the M&A and the potential earning accretion/dilution. On the other side, Banks M&A are always assessed by supervisors on a case-by-case basis. The main objectives from their point of view will be to ascertain, to the extent possible, the sustainability of the business model of the combined entity. In this sense, the analysis of the potential goodwill impairment represents a key component of the consideration.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-031-43872-1_4

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DOI: 10.1007/978-3-031-43872-1_4

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