BANK MERGERS : THE CASE OF KEPPEL AND TAT LEE BANKS

Abstract

With the globalization of financial services industry, banks must now achieve a critical size in order to compete in the playing arena of global financial market. Hence, mergers of financial institutions are rapidly becoming a global phenomenon and here in Singapore, Keppel Bank and Tat Lee Bank effectively merged on 31st December 1998 to become the fifth largest domestic bank.

When banks merge, revenue enhancement, better operating efficiencies and higher cost are expected. These are better known as synergies, which is not attainable if the two individual banks were to operate independently. However, not all mergers are able to generate synergy. Some may fall short of the desired benefits. Hence, in this exercise, an attempt is made in addressing these synergistic gains that might arise in the merger between Keppel and Tat Lee Banlc Results in the analysis revealed an additional $1.6 billion created in this merger.