Mergers and Acquisitions in European banking higher productivity or better synergy among business lines?

This paper aims at assessing the extent to which M&As in European banking sector over the period 1996–2003 result in two simultaneous catching up and convergence processes of consolidating groups. First, do the M&As significantly contribute to the consolidating banks to catch-up with the productivity benchmark? Second, in terms of synergies or complementarities among business lines, is there a convergence process of output mixes among the individual banks of the M&A operations? Our sample is made up of 42 M&A transactions and 587 non-merging banks in Europe. The main conclusion is that M&A operations in the European banking industry appear to be essentially motivated by an objective of improving complementarities among lines of work from each com- ponent of M&As rather than increasing productivity at the merged banks.