Bank Performance, Mergers and Acquisitions in Ghana: The Case of Ecobank Ghana -TTB Takeover and UT Financial Services
Keywords:
Merger, Acquisition, Synergy, Return on Equity, Valuation Decision, Financing MethodsAbstract
This paper explores bank performance after mergers and acquisition in the Ghanaian banking industry. By using the merger and acquisition of two prominent banks in the Ghanaian banking industry as a case, the paper examines the post-acquisition performance of banks as proxied by Return on Equity (ROE) of the acquiring banks against the financing methods used in the mergers and acquisitions of banks in Ghana, the valuation decisions adopted in the mergers and acquisitions transactions, the distribution policies after the acquisitions, the stance of the parties involved with the merger or acquisition and the synergy created after the merger or acquisition. The study used a simple panel regression model which regressed bank performance of the acquirer on the independent variables. The study conducted the appropriate diagnostics of the model before it was adopted. The results of the statistical analysis reveals that banks which adopt proper valuation models before acquisition, proper financing methods, have good stance after an acquisition or a merger and create synergy after the merger or acquisition perform better after the acquisition or the merger.
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