Tuesday, October 11, 2011

Inorganic Growth

This is a great summary of the banking  industry consolidation over the past 20 years. It is a classic example of inorganic growth for the banks that were the consolidators. Four key questions:

1. Was the overall size of the market/pie increased by this activity?
2. Was the competitive separation of the consolidating banks increased by their actions?
3. If the answer to 2 was no, how can the short term growth in earnings from the consolidation be sustained?
4. Is this overall strategy sustainable?

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