Introduction

Abstract

Global banking systems continue to experience marked change in the light of forces that are reshaping the structure of markets and the way in which banking business is being conducted. One major trend has been the growth in both domestic and cross-border consolidation that is creating large diversified financial firms that span continents. Domestic consolidation is increasing concentration, raising competition concerns for regulators and consumers. Cross-border deals are promoting the access and coverage of foreign banks in domestic markets in both developed and emerging markets and this has implications for the competitive position of domestic banks and presents challenges for regulators — both within country but it also heightens the need for greater international collaboration. In addition, the owners of banks — namely shareholders — need to know whether such consolidation activity will increase the value of their investments or whether it will be value destroying. The potential for risk diversification and the realization of scale, scope and other economies are also of key interest.