Profitability and risk of banks pre and post M&As: preliminary evidence from Vietnam

Abstract

The conduct of Mergers and Acquisitions (M&As) of commercial banks is an important activity in order to fulfil the strategic objectives of all banks involved. However, M&As activities in Vietnamese banking sector have unique characteristics because most of the recent deals are arranged by central bank and other financial regulatory authority bodies with the purpose of achieving a prudential financial system. This article examines the effects of M&As in banking sector by analyzing profits and risks of commercial banks pre and post M&As in the recent liberalization episode in Vietnam. The preliminary result suggests that most of commercial banks experience lower profits and higher credit risks after M&A. Hence, it seems that most of banks face more difficulties after M&A