Are there Benefits to Mergers Between Large Banks and Demutualized Insurers?
Driving the consolidation of financial institutions has been a host of factors such as stockholder value, creation of national champions able to compete with global competition, the advantages of scale, and relative market capitalization as a defence against takeovers. This has resulted in a widely held view that the large merger wave is inevitable. According to the DIBC Study, these arguments clash with equally convincing arguments against consolidation from the academic, analyst and consulting communities. Academics and analysts who have examined the statistics for European and US mergers concluded that, at best, the evidence for and against bank insurer mergers is not conclusive. This view is supported in a recent study entitled Consolidation and Efficiency in the Financial Sector: A Review of the International Evidence. A 2002 Joint Study prepared by D. Amel of the Federal Reserve Board, C. Barnes of the Department of Finance Canada, F. Panetta and C.
