Bank Mergers and Aquisitions

Many of the mergers sweeping through U.S banking in recent decades reflect a lowering of the legal barriers that previously prohibited or severely restricted bank expansion. First, state laws forbade interstate banking in United States untill the 1980s ushered in a rash of new state laws allowing banks and bank holding companies to cross state borders, usually with reciprocity, so that existing banks in the states being entered could likewise cross state lines.

Banks in United States are mimicking their European and Asian counterparts by reaching out not only to gobble up others, smaller banks, but also security brokers and dealers, finance companies, insurance firms , credit card companies, thrift institutions and other nonbank service providers

The current merger wave in banking and among other financial services industries is unlikely to end soon, and its effects will be long lasting. The public will be confronted in the future with fewer, but larger banking organizations that will pose stronger competitionfor banks not joining the acquisition and merger trend.There are different causes and effects of mergers in banking. It has also some laws and regulations that shape bank mergers and factors that are important in selecting a bank's merger partner.