The Impact of Mergers and Acquisition in the Banking Industry in Ghana.

Abstract

This project work looked at the impact of mergers and acquisitions in the banking industry in Ghana using Ecobank’s acquisition of The Trust Bank (TTB) and Fidelity Bank’s acquisition of Procedit Saving and Loans Limited as case studies. Financial Statements of acquiring entities were analyzed prior to acquisition and also after their respective acquisitions with the year of acquisition being included in the analysis. The results indicated an overall improvement in the post-acquisition ratios for the majority of the ratios computed for Ecobank with a decline in the capital adequacy ratio. However for Fidelity bank’s acquisition of Procredit Savings and loans, half of the post-acquisition ratios computed showed a decline whiles the other half showed general post acquisition improvement. There was a great improvement in the Net profit margin, loan to deposit ratio, interest coverage ratio and income growth for Ecobank whiles Fidelity Bank recorded a massive increment in its capital adequacy ratio and interest coverage ratios respectively. The study concluded with a summary, conclusion and recommendations on how the positive effects of mergers and acquisitions on the financial performance of banks could be maximized. Keywords: Synergies, Merger, Acquisition, Ecobank Ghana Limited, Fidelity Bank, Banking.