DP14663 Value creating mergers ?? British bank consolidation, 1885-1925

Author(s): Fabio Braggion, Narly Dwarkasing, Lyndon Moore
Publication Date: April 2020
Keyword(s): Banking, Great Britain, mergers and acquisitions
JEL(s): G34, N23, N24
Programme Areas: Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14663

The British banking sector had many small banks in the mid-nineteenth century. From around 1885 until the end of World War One there was a process of increasingly larger mergers between banks. By the end of the merger wave the English and Welsh market was highly concentrated, with only five major banks. News of a merger brought a persistent rise in the share prices of both the acquiring and the target bank (roughly 1% and 7%, respectively). Non-merging banks, especially those whose local market concentration rose as a result of the merger, saw their stock prices rise.