Theoretical Aspects Of The Essence Of Bank Consolidation

Abstract

The article considers theoretical aspects of the essence of bank consolidation. The author emphasises the diversity and multifaceted nature of «consolidation», which has led to its use in various activities. A detailed analysis of the literature sources made it possible to outline the essential meaning of the term «consolidation» by the most common areas and directions of its use. It is noted that consolidation can be used as a tool for stabilisation, systematisation, transformation, etc. in various fields of activity. The carried out scientific analysis of terminological definitions revealed a clear link between the concepts of «reorganisation», «restructuring», «integration» and «consolidation» in the banking sector. It is proposed to use a comprehensive approach to determine the essence of bank consolidation, which includes three levels: legal, accounting, and economic. It is proved that the processes of bank consolidation should be studied in two aspects: as a process of capital pooling and as a process of bank merger. It is emphasised that in the narrow sense, bank consolidation is a merger of banks, in which there is a legal succession in the form of transfer of all rights and obligations of several banks to one bank. In a broader sense, bank consolidation, which includes three levels: legal, accounting, and economic. It is proved that the processes of bank consolidation should be studied in two aspects: as a process of capital pooling and as a process of bank merger. It is emphasised that in the narrow sense, bank consolidation is a merger of banks, in which there is a legal succession in the form of transfer of all rights and obligations of several banks to one bank. In a broader sense, bank consolidation can be viewed as a process focused on achieving specific goals and is a series of sequential actions implemented through a set of measures of a legal and economic nature. It is substantiated that the term «consolidation» in relation to banks is a collective concept, which includes not only individual transactions or legally significant actions regarding mergers, acquisitions or takeovers of banks, but also the acquisition of corporate control by a newly formed bank. The forms of bank consolidation include mergers, acquisitions, accessions, and amalgamations. The economic basis of bank consolidation is formed by social relations that develop in the commercial activity of banks and are aimed at combining their economic and financial potential and corporate control over banking activities in the financial market.