The debate on the optimal size of banking institutions remains a constant topic in the media. The view of the specialist financial literature on the matter has not changed substantially.
It could be summarised in the following three points:
– The relationship between size and profitability is uncertain. No significant correlation is observed between an institution’s size, measured by the average volume of its assets, and its ROE (return on equity).
– Although, in theory, one might think that size should make it possible to generate comparative advantages, reduce costs, increase and diversify income, etc., the reality is that the facts do not seem to support the existence of significant economies of scale or scope, or that they do not run out at relatively small sizes.
– Studies carried out on large samples of merger transactions across all types of companies reveal that in 44% to 58% of cases, after two or three years, no value would have been created for shareholders.
