An evaluation of bank acquisition using an accounting based measure: a case of Amalgamated Bank of South Africa and Barclays Bank Plc.

  • Received January 6, 2017;
    Accepted February 10, 2017;
    Published May 5, 2017
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  • DOI
    http://dx.doi.org/10.21511/bbs.12(1-1).2017.09
  • Article Info
    Volume 12 2017, Issue #1 (cont.), pp. 160-165
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In 2005, Barclays Bank Plc acquired 56.4 percent stake of Amalgamated Bank of South Africa (ABSA). The performance of this acquisition has never been evaluated. Therefore, the purpose of this article is to evaluate the performance of the acquired ABSA through an accounting based measure. The primary source of data was the 2004-2015 ABSA audited financial statements. The audited financial statements are publicly available. The period 2004-2015 includes a period before, during and after the acquisition. In this article, a financial statement analysis method through accounting based measure was the preferred research method. The financial statement analysis method was preferred because of its strength and ability to assess viability, stability and profitability by using formulae, ratios and calculations. Therefore, this article used financial formulae and ratios as acceptable accounting based measures to evaluate the performance of the acquired ABSA. The major finding is that the acquired ABSA is doing better than at the pre-acquisition stage and the share price of the acquired ABSA has been increasing since 2005 to 2015.

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    • Fig. 1. The financial performance of the acquired Amalgamated Bank of South Africa for the period 2006-2015
    • Table 1. Summary of financial results for ABSA / Barclays Plc.