Mergers, Acquisitions and Takeovers Case Study

Hypobank and Vereinsbank Merger : Troubles Outweigh the Synergies

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Abstract:
The merger of Hypobank and Vereinsbank in 1998 created HypoVereinsbank, one of the largest private banks in Germany. When the two similar sized banks decided to merge, it was considered as the 'merger of equals' and the 'merger of the best'. It received the full support of the German government, which welcomed the prospect of having a local bank as a dominant player. But soon after the completion of the much-hyped merger, the hidden motives of the two banks and the deception of one of the banks were exposed. The new bank incurred losses continuously as a result of the deception coupled with a weak European economy. In spite of its efforts for revival, the bank has only been partly successful in eliminating its troubles and has turned into a potential takeover target.

Pedagogical Objectives:

• To discuss perceived synergies behind the merger, the financial impact of the deception and the revival efforts of the bank
• To provide an insight into the consequences of a hasty merger.

Keywords : HypoVereinsbank (HVB) Group; Hypobank; Vereinsbank;Mergers,Acquisitions,Alliances Case Study; Super regional bank; Albrecht Schmidt and Eberhard Martini; Turnaround and growth prospects; The bank in the heart of Europe; Investment and capital management services; Retail banking services; Tenth largest private bank in the world; Merger synergies; Bad loans scandal; Management restructuring; Focus on international business and operations; Innovative investment products

Contents : 
The Merger
The Aftermath
The Road Ahead
Top Ten German Banks
World’s Top Ten Largest Banks by Total Assets
HVB Group’s Loans and Pre-tax Profits
Biggest Banks in Europe
German Banks’ Market Troubles
HVB’s New Management Structur