ANALYSIS OF MERGER AND ACQUISITIONS ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN NEPAL

Abstract

The objective of study is to investigate whether the financial performance of the selected merger and acquisition commercial banks improve after the merger. The purpose of the study to identify the effect of merger and acquisition on return on assets and return on investment of Siddhartha Bank Limited, Global IME Bank, & Prabhu Bank, examine the effect of merger and acquisition on earning per share and market price per share of Siddhartha Bank Limited, Global IME Bank, & Prabhu Bank. It also measure the impact of merger and acquisition of Siddhartha Bank Global IME Bank and Prabhu Bank Limited. The research design of the study is descriptive and casual. The research has touched upon some of the important human issues in mergers and acquisitions and thrown some light on managing the human resource responses as well. Employees seem optimistic regarding the feature of bank. The researchers suggests for participatory management concept by anticipating and collecting feedback from employees of merging entities; and it may support in implementing effective merger and acquisition policy in Nepal. The post-merger performance compared to pre-merger performance witnessed some instability due to the difference in net earnings. The P/E ratio of Siddhartha Bank seems to be increasing whereas the P/E ratio of seems to be decline as well as fluctuating at the existing price. Thus, there is moderate effect on P/E ratio in post-merger phase. It depicts that the shareholders are being benefitted in post-merger phase. NPL to total loan of two sampled banks seems to be decreasing in post-merger phase. It may be good indicator for the banking industry. In the initial phase of merger, Siddhartha, of NPL to total loan has witnessed increasing trend and that may be the outcome of merger of banks as they have shared the liabilities as well. But in following years, the NPL has been decreased and it is the high-quality indication for banking industry.