Mergers and Acquisitions as a Form of Expansion of Russian Banks on the Foreign Financial Market

<p>Bachelor&#39;s Thesis topic is &quot;Mergers and acquisitions as a form of expansion of Russian banks on the foreign financial market&quot; contains 9 formulas, 5 figures and 21 tables. Research paper consists of 73 pages. In the Bachelor&rsquo;s Thesis have been used 42 sources. Keywords: mergers and acquisitions, expansion, financial markets, banks, synergy, evaluation of efficiency of M&amp;A transactions, discounted cash flow.</p><p>The process of international integration of banks boosts mergers and acquisitions in the banking sector. Growing activity of Russia in the international financial market, as well as the accession to the WTO makes the processes of transnationalization important strategic direction to develop the financial sector in order to maintain macroeconomic stability and to protect the interests of national banks. Thus, the study of the expansion of Russian banks on the foreign market is <strong>actual</strong>.</p><p>The <strong>purpose</strong> of this research is to identify the features of using M&amp;A in the process of expansion of Russian banks to foreign financial market. To achieve the purpose the next tasks were identified:</p><ul><li>to analyze theoretical aspects and methods of estimating the M&amp;A efficiency;</li><li>to analyze the current state of the Russian M&amp;A market in general and in the financial sector;</li><li>to analyze the international activities of Russian banks: to identify the stages and form of expansion and features of M&amp;A of Russian banks on the foreign financial market;</li><li>to estimate the efficiency of the acquisition of Russian bank &ldquo;Sberbank&rdquo; with Turkish bank &ldquo;Denizbank&rdquo;.</li></ul><p>The <strong>object</strong> of the research is the transnational acquisition of &ldquo;Sberbank of Russia&rdquo; and Turkish bank &ldquo;Denizbank&rdquo;. The <strong>subject</strong> is to identify the features and to estimate the synergies of the M&amp;A transaction.</p><p>In the process of examining the literature on this topic was revealed that the majority of researches exploring international banking institutions are written by foreign authors. In Russian literature processes of expansion of Russian banks on foreign financial market are insufficiently studied, mainly, researches of Russian authors are devoted to the problems of the influence of foreign capital on the Russian financial system.</p><p><strong>Theoretical and practical</strong><strong> significance</strong> of the work is that the analysis of the international integration of financial institutions with the Russian capital would identify the main directions of development of the Russian financial sector in foreign markets.</p><p>In the <strong>introduction</strong> the relevance of the topic is considered, the purpose, tasks and theoretical and practical significance are defined. <strong>The first chapter</strong> is called &ldquo;Theoretical aspects of mergers and acquisitions&rdquo; and devoted to a detailed consideration of the content of transactions, classification of M&amp;A, strategies and motivations, also synergy effect and ways to assess it are defined. <strong>The second chapter</strong> is called &ldquo;The current statement of the Russian financial sector&rdquo; and devoted to the analysis of the M&amp;A market in general as well as the Russian financial sector in M&amp;A market. <strong>The third chapter</strong> is called &ldquo;The estimation of the Russian capital in the foreign financial market&rdquo; is devoted to the study of the process of expansion of Russian banks on the foreign market. In this chapter the stages and form of expansion and their features are defined, the features of using M&amp;A tools in the process of expansion are investigated. Also the largest transaction (where the absorber bank was Russian) which has ever happened to expand on the foreign financial market is analyzed, and the efficiency of the transaction is assessed. In <strong>conclusion</strong> the main results of the study were formulated.</p><p>The main features of the expansion of Russian banks on the foreign financial market using M&amp;A tools are:</p><p>&nbsp;</p><ul><li>significant role is taken by &nbsp;banks which are financed by government (parastatals);</li><li>a large number of transnational transactions happens between Russian organizations and banks;</li><li>transactions are often provided by banks that have already bought a credit organization in this country before;</li><li>significant role in investment in the foreign financial market&nbsp;&nbsp; play private bankers;</li><li>Russian banks often use foreign holding companies to acquire foreign banks.</li></ul><p>The assessment of the efficiency of the transaction between Sberbank and Denizbank in 2012^th was implemented using DCF method. Firstly were estimated the values of both banks before the transaction, secondly was estimated the value of integrated bank with the increase in the net profit obtained abroad. &nbsp;Thus the value of Sberbank is $114,191 billion, the value of Denizbank is $3,948 billion, the value of the integrated bank is $118,384 billion and a synergy is $245 million, what means that transaction is effective. According to the assessment, the value of Turkish bank exceeds the amount paid by Russian bank for the transaction ($ 3,472 billion), what means that the bank has been underestimated because of high market volatility. Finally, the indicators of financial activities of both banks before transaction were analyzed and the same indicators of Sberbank after the transaction also were analyzed, the results of which revealed that the acquisition of a Turkish bank has a positive impact on the financial performance of the Russian bank.</p>