Post-merger integration in banking: A framework for stability and growth

By Markus Strietzel, Chantal Jäger, Thomas Richter, Jörg Delhaes and Martin Hülsen

Germany had almost 3,000 banks in 2000. By 2023, this figure had more than halved. The rest of the DACH region experienced similarly steep declines in the period, with Austria losing 49% of its banks and Switzerland 37%. The key reason behind these dramatic figures? Mergers and acquisitions (M&A).

Today, M&A deals continue to shape the banking industry, driven by the need for digital transformation, compliance with regulatory changes and evolving market dynamics. The recent mega-merger in Switzerland is just one example. The strong consolidation trend and robust M&A activity is set to persist as financial institutions seek to expand their market presence, enhance capabilities, realize economies of scale, diversify risk and adapt to shifting industry demands.

The growing M&A trend does not, however, mean that mergers are getting easier. While M&A presents significant opportunities for growth and transformation, effectively integrating the merging entities remains a real challenge. Achieving targeted synergies, aligning operations and merging corporate cultures without disrupting ongoing business activities requires a well-defined and structured approach to pre-merger preparation and post-merger integration (PMI). And there is no one-size-fits-all model – the PMI-approach needs to be adapted to the involved entities and their relationship, whether a merger of equals or private equity investment. Success requires a comprehensive, flexible and growth-focused PMI strategy.

In this article, we outline the key components of Roland Berger’s PMI approach for banks. Our flexible framework provides a clear and practical roadmap for the preparation and integration of a merger to master integration complexities and help banks realize the full potential of their mergers.

Building a strong bond: The need for effective PMI

There is a broad range of reasons for M&A between banks. These range from achieving economies of scale or market expansion to regulatory compliance and financial distress.

In addition, there are numerous different M&A scenarios. For example, the deal may involve a larger bank taking over a smaller bank, it may be a cross-border merger or it may relate to a bank acquiring another type of financial institution, such as a fintech.

No matter what the make-up of the merger, the target is always to build a stable platform to maximize growth. The path is not straightforward, however. Our experience in PMI has enabled us to identify several common mistakes made during the merger process. These include delays in implementing synergies, underestimating merger-induced losses or stakeholder resistance, not accounting for cultural differences and failing to foresee bottlenecks.

So how can banks avoid making the same mistakes and ensure the specific needs of their merger are fulfilled? A coherent and effective approach to PMI is critical to success.

Our approach to PMI: A comprehensive framework for success

Roland Berger has developed a PMI framework tailored for banks that emphasizes a flexible, customized approach to bank mergers. It can be used to tailor strategies to the unique requirements of each merger, ensuring a seamless transition that maximizes value and minimizes potential risks.

The framework is structured around three phases – Deal preparation, Integration preparation and Integration supported by value creation across the phases. These cover the period before the signing to the legal merger and closing through to the operational merger and beyond. Spanning the phases are ten modules which reflect the key considerations in PMI, from vision and strategy to products, IT and culture. Together, they provide a comprehensive framework that ensures continuity and alignment throughout the integration journey.

Register now to access the full study and explore key insights on banking consolidations and effective strategies for post-merger integration.