AN EVALUATION OF FINANCIAL PERFORMANCE BEFORE AND AFTER MERGER AND ACQUISITION OF SELECT INDIAN BANKS: AN EMPIRICAL STUDY

Integration of business entities is a world wide phenomenon and over a couple of decades, it has experienced an unprecedented in transforming the economy. Integration has transformed as one of the strategies of all business entities, being so, the banking industry is not an exception. One such tool of Integration is mergers and acquisitions. Merger and acquisition enhance the value of shareholders for acquirer and target companies and enable to gain greater access to market share, control of price, increased profitability. M&A enable banks to rapid growth in terms of market share, size of the expansion, reduced risk through diversification, synergy benefits, counter competition, operational and financial economies reduced organizational and business risks, gain tax benefits, entering new markets & geographies, capitalizing on economies of scale, technology and infrastructural facilities utilization to its maximum is a couple of driving force behind mergers and acquisitions (M&A). In the last few decades, M&A is the focal point of business strategy; many business organizations either merge or acquire the weaker in the industry to realize economies of scale, financial synergy, market capitalization and augmented an impressive activity. M&A occurs when two organizations agree to move forward as a single or joint entity for their mutual benefits, while acquisition occurs when Abstract :

an organization purchases some assets, plant, equipment, business unit or shares of other organization or it acquires entire ownership of other organizations (Sherman 2011). This development is the hour of the day, need immediate attention. Though several studies carried out at different times by different individuals and organization, still there is a lot to analyze and interpret the phenomenon in Indian banking sector.

Measuring Financial Performance
There are several approaches for evaluating financial performance of M&A depend on how well the bank utilizes its assets, shareholders' equities and liabilities, revenues and expenses. The performance evaluation of banks is important for all parties including depositors, investors, bank managers, regulators, customers and employees etc. Financial performance of banks under M&A can be measured through the financial ratio(s) using accounting and financial data of pre and post M&A. Rehman and Ahmed (2008) compare the financial ratios to measure the efficiency of banks.
Financial performance can also be measured by Parameters like Deposits, Advances, Investments, Net Profits, Interest earnings, Interest expenses, Total Assets, Total Income, Net interest margin too.The study carried out by measuring overall financial performance by these parameters. (Prof. Shivaraj B &Nagesh Mr., 2015), "premerger & post-merger performance evaluation -a case study on united spirits ltd and Shaw Wallace & company ltd." Is a paper for International Journal of World Research. In this paper, the researcher aims at studying the financial performance of United Spirits Ltd and Shaw Wallace & Co ltd merger as an objective and also to identify synergy from the merger. The study considers four year before and after data for analysis and data type being secondary BSE and Annual reports of companies. Parameters like Equity value to Book value of the stock, Equity value to Earnings, Earnings Per Share, Net profit Margin and EBITDA to Total Liabilities are used in the study. Statistical tools like mean and paired t-test applied to test the hypothesis. The study observed no significant difference in the financial performance of United spirits ltd after acquiring Shaw Wallace & company and concludes that financial synergies were insignificant for acquiring company and merger has no impact on acquiring company. (Abbas, Hunjra, Azam, Ijaz, & Zahid, (2014), "Financial performance of banks in Pakistan after Merger and Acquisition" is for Journal of Global Entrepreneurship Research. In this paper, the researchers trys to evaluate the financial performance of banks operating in Pakistan as an objective. Researcher has used the financial and accounting data of ten banks and analysed the variables profitability and efficiency, leverage and liquidity and pre and post-merger analysis was also carried out. The financial indicators like ROA, ROE, NIM, Spread, EPS, Interest income to Interest to Interest income, It was observed from the results that there was no positive relationship between mergers and acquisition and financial performance of banks in Pakistan and conclude by stating bank M&A during 1/1/2008 t0 31/3/2009 period was not doing well. Brajesh Kumar Tiwari (2014), "A case study of merger of Benares state bank ltd. (BSB) with bank of Baroda (BoB)" for Asian journal of management sciences & educationist a study on the performance of bank merger by considering financial parameters like capital Deposits, Investment, Advances etc. Ratio analysis was carried out by researcher to analyses data. The Merger of Bank of Baroda with Benares state Bank was studied in the research. It was observed that financial performance especially the efficiency increases after merger. The Study conclude that the capital, Interest, Net profit increase while Deposits, Investment decrease. (Mahesh & Prasad, 2012), "post-merger and acquisition financial performance analysis: a case study of select Indian airline companies", is the paper for international journal of engineering and management sciences. In this paper the researcher had the objective to analyze airline industry after consolidation in 2007-08. The study tries to analyze the impact of M&A on profitability, leverage, liquidity position, and marker standards as parameters of study focusing on Indian context with case study method. Ratio analysis is used to analyze and convenience sampling method was adopted for collecting data paired t-test and correlation were used to analyze the data. It was observed in the study that there was an insignificant improvement in ROA, expense to income, EPS, DPS and conclude but stating there was no improvement after merger and acquisition in financial performance of airline industry.

Research Gap
The term performance has various meaning and defined differently based on the perspective of the research work carried out like accounting, financial, operational so on and so forth. Through review of literature it is evident that m a n y r e s e a r c h a r t i c l e s o n f i n a n c i a l performance analysis based on profitability, liquidity, efficiency, asset quality, capital adequacy, leverage, productivity, growth, ROE, ROA, CAMEL ratios, ratio analysis so on and so forth.
Financial performance be measured by sum of bidder and target bank pre merger parameters like Deposits, Advance, Investments, Net Profit, Interest earnings, Interest expenses, Total Assets, Total Income, Net interest marginof mergers and acquisitions in banking sector are common and crucial and most of studies concentrate only on the factors of bidders' pre and post parameters. But, ignored target pre merger parameters in the studies. This study focus of both target and bidder pre merger performance on par with post merger performance of bidder for better understanding of merger and acquisitions financial performance in the post merger scenario.

Research Objective w
To analyze the financial performance before and after merger and acquisition of select Indian Banks

Scope of Study
The study covers the five years before and after financial statistics for analysis of the select sample banks and only banks merged between 2000 to 2010 considered for study

Sources of data
The research is descriptive and analytical the study was carried out by collecting secondary data through Journals, newspapers, articles, publications, financial magazines, official websites, RBI reports, SEBI reports, and financial statements of respective banks. To analyze the financial performance of select Indian banks, an integrated approach was employed using statistical tools like descriptive statistics, Correlation and the multivariate regression model and paired t-test Sample Universe -The sample universe is banks observed merger and acquisitions during the period from 2000 to 2010 and public and private banks operating in India. 10 banks including both targets and bidder banks for the public and private sector.

Hypothesis
H : There is no significant relationship in the 0 financial performance of banks were consider for this study before and after merger and acquisitions.

Data Analysis
Banks' financial variables like Deposits, Advances, Investment, Net profit, Total Assets, Total Income, Interest earned, Interest expended and Net interest margin are used as financial parameters. Descriptive statistics like mean and paired sample t-test and multivariate regression model from inferential statistics were applied for analysis.         • OBC and Global trust bank merger observed the best synergies compared to other bank mergers in terms of Advances, Total Assets and Deposits with P Value of 0 . 0 0 1 2 0 , 0 . 0 1 1 0 4 a n d 0 . 0 1 4 6 3 respectively. It is evident that post merger Advances increased more than the deposits Total Income increase indicating the positive part of Advances. • IDBI bank and United western bank merger observes negative synergy in Interest expended and positive synergies for Investment and Net profit with P value of 0.03005, 0.03542 and 0.03589 respectively. It is evident that Post merger I n t e r e s t e x p e n s e h a v e i n c r e a s e d significantly. However, Investments and Net profits also have increased but not as much as Interest expense. It is because of the Negative profits incurred by UWB in pre merger period off set by profits earned by IDBI bank resulted in significance of Interest expense ahead of Net profit and Investment synergies. Negative profits and volume impacted on post merger performance, is evident form NBL and Punjab National Bank.

Conclusion
The success of merger depends on creating synergies in all parameters than in only few parameters of performance. HDFC bank and ICICI bank are the examples in creating synergies in all parameters of financial performance than other banks is evidences for successful mergers executed.