Frolova E.A.Moscow State Institute of International Relations (University) of Ministry of Foreign Affairs of Russian Federation, Moscow, Russian Federation elvinafa@gmail.com
Khanuskova S.Moscow State Institute of International Relations (University) of Ministry of Foreign Affairs of Russian Federation, Moscow, Russian Federation shanuskova@hotmail.com
Importance The article overviews the M&A market in the banking sector of Russia and some foreign countries in 2005–2015, and performs a comparative analysis of methods to evaluate parties to such deals. Objectives The research analyzes the market value of public banks in Russia, starting from 2007 through 2015. The market value was assessed with the Price/Book Value ratio, and compares this value with identical ones in Eastern Europe, China, India, Brazil. We also identify the specifics in appraisal of M&A deals through a sample of the banking sector of Russia for 2005–2015. The research elaborates methods for indicative assessment and illustrates the real deal between MDM Bank and BINBANK in 2015. Methods The research uses methods of comparative, statistical and regression analysis, and the theory of appraisal of value and banking business. Results Banks were shown to be appraised at higher value in the market when they had higher return on equity and low additional expenses. As a common trend, we proved that retail banks were acquired at low value due to recall of their licenses, negative GDP, reduction in the return on assets and equity of the banking sector, and continuing growth in overdue debts. We also found out that most deals were of horizontal nature, with strategic investors playing an important role in the market. Conclusions and Relevance Appraisal of credit institutions will remain a challenging issue, and large banking groups will continue acquiring smaller and medium-sized banks with high discount on capital.
Keywords: commercial bank, M&A, market value, appraisal model, ratio
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