True impact meets true grit: understanding and thriving in banking combinations.(how to handle acquisition and merger activities)

There's going to be a merger - so what else is new? Perhaps the news is that lenders can be better prepared for their next career step with a better understanding of different types of mergers and their implications. Specific tips conclude this article.

Consolidation of the banking industry undoubtedly affects both lending and credit professionals. The true effects of such consolidation, however, may not be those dictated by conventional wisdom. The decline in the number of banks, from more than 14,000 in 1986 to approximately 9,000 by year-end 1997, has been widely reported throughout the industry and in the financial media. Moreover, more than 100,000 full-time equivalent banking positions have been lost since the mid-1980s.

An instinctive reaction to such news would be to conclude (and lament) that the profession is contracting and its importance diminishing as a result of these consolidations. Such inferences, however, are unwarranted. The consequences resulting from the recent spate of consolidations are not all negative ones; in fact, opportunities abound for those insightful enough to take advantage of them. Lending and credit professionals who understand the underlying causes and effects of the consolidation process will be able to seize opportunities and avoid professional pitfalls.

The reason why banks are consolidating is easy to grasp: to increase shareholder value by increasing revenue streams, reducing costs, adding market share, expanding products and services, and diversifying geographically. Understanding who is consolidating with whom, where consolidations are occurring, and how they are combining, however, are not as well known but are paramount in parlaying the …