Why bank mergers bode well for the region
Published: 04:06 PM,Jun 23,2021 | EDITED : 10:06 AM,Jun 24,2021
Economists have emphasised the importance of bank mergers in the region to cope with present and future challenges. Mergers enable the adoption of best practices and procedures that pave the way for healthier growth in the financial, banking and investment sectors. This approach will also help buttress national economies through the establishment of efficient and sound institutions with good quality assets and high liquidity.
The few mergers reported in this sector came after extensive, in-depth and comprehensive due diligence and economic studies that took into account all scenarios. The most recent merger, which took place last week in Doha, was Al Rayan Bank and Gulf Commercial Bank to establish a unified entity after requisite approvals between the two institutions.
Banking sector merger take into account resulting benefits to both constituent entities, as well as the wider stakeholder community, to create a strong cornerstone for financing and investment. This will result in a significant reduction in administrative and operational costs for both parties and improve their collective performance, competencies and capabilities. It is expected that a merger will contribution to a 30 per cent reduction in operational costs upon the completion of the exercise encompassing staff, offices, branches, transportation, and other functions. The new entity will also benefit from cost reductions in relation to fees and financial transactions.
Today there is no place for weak institutions in the world, whether they operate in the political or economic realm, unless they are distinguished by their strength, performance, efficiency, caliber of their staff, and the use of modern technologies to deliver their services, particularly in light of the ongoing pandemic.
All of this is also true of the banking sector in our region, where a number of bank mergers have been concluded in recent years with beneficial impacts for the wider economy. It has led to the establishment of large institutions corporate institutions that have enabled the provision of funding support for individuals, entrepreneurs and owners of small business. We expect that the trend will be replicated during the coming period due to the constraints that governments and private institutions are going through because of the adverse effects of the economic slump, on the one hand, and the pandemic on the other.
Hence, any economic or banking sector integration in the world will lead to the strengthening of institutions in addressing current and future challenges and difficulties. Mergers will undoubtedly lead to the creation of stronger financial institutions not only at the national level, but regionally and globally as well. Indeed, bank mergers in any country have many positive effects for the banking sector in particular and economy in general, as they contribute to the delivery of enhanced banking services.
The few mergers reported in this sector came after extensive, in-depth and comprehensive due diligence and economic studies that took into account all scenarios. The most recent merger, which took place last week in Doha, was Al Rayan Bank and Gulf Commercial Bank to establish a unified entity after requisite approvals between the two institutions.
Banking sector merger take into account resulting benefits to both constituent entities, as well as the wider stakeholder community, to create a strong cornerstone for financing and investment. This will result in a significant reduction in administrative and operational costs for both parties and improve their collective performance, competencies and capabilities. It is expected that a merger will contribution to a 30 per cent reduction in operational costs upon the completion of the exercise encompassing staff, offices, branches, transportation, and other functions. The new entity will also benefit from cost reductions in relation to fees and financial transactions.
Today there is no place for weak institutions in the world, whether they operate in the political or economic realm, unless they are distinguished by their strength, performance, efficiency, caliber of their staff, and the use of modern technologies to deliver their services, particularly in light of the ongoing pandemic.
All of this is also true of the banking sector in our region, where a number of bank mergers have been concluded in recent years with beneficial impacts for the wider economy. It has led to the establishment of large institutions corporate institutions that have enabled the provision of funding support for individuals, entrepreneurs and owners of small business. We expect that the trend will be replicated during the coming period due to the constraints that governments and private institutions are going through because of the adverse effects of the economic slump, on the one hand, and the pandemic on the other.
Hence, any economic or banking sector integration in the world will lead to the strengthening of institutions in addressing current and future challenges and difficulties. Mergers will undoubtedly lead to the creation of stronger financial institutions not only at the national level, but regionally and globally as well. Indeed, bank mergers in any country have many positive effects for the banking sector in particular and economy in general, as they contribute to the delivery of enhanced banking services.