Mergers in Financial Services

This document (of 308 pages) comprises the proceedings of an OECD roundtable on mergers in financial services (bank mergers). The number and size of bank mergers have recently been on the increase in many OECD countries and this seems to be related to four interactive forces: regulatory reform; globalisation in both financial and non-financial markets; excess capacity/financial distress; and technological change including the development of electronic banking. All but a very few of the mergers have proceeded without challenge under competition laws. Where there have been competition problems, competition officials have been faced with some difficult questions, especially as regards market definition, expected efficiencies, and the probable impact of electronic banking. While it is difficult to generalise, most of the competition problems that have been identified seem to relate to lending to small and medium sized enterprises. Remedies for such problems have often involved divestment of carefully selected bank branches. To achieve their goals, such divestments call for close scrutinty by competition authorities. This document consists of an executive summary and background paper by the Secretariat, 15 delegation submissions, and a summary of the oral discussion.