The Performance of Bank Mergers and Acquisitions: The case of the Commercial Bank of Morocco and Wafabank

Measuring the effectiveness of bank mergers and acquisitions has been the subject of several studies mainly on Anglo-Saxon and European markets. The aims of this paper is to examine the performance of these operations realized on emerging markets and appreciate the creation of financial and strategic values of a bank merger, in this particular case, the merger between the Commercial Bank (BCM) and Wafabank who took place in Morocco on 2003. In this research, the method of event study, which measures stock performance in the short term, and the method of pairing, which assesses accounting performance, were used. The analysis of empirical results shows that at the announcement of the transaction a negative abnormal return for the acquirer and positive for the target firm. These first results are consistent with other empirical studies who emphasized the negative impact of mergers and acquisitions on shareholder wealth of the acquiring and positive impact on shareholder wealth of the target firm. Also, the financial ratio analysis shows an improvement in profitability and productivity of the combined entity in the medium term, which is consistent with research confirming that mergers lead to a better use of assets, and can benefit from operational synergies and efficiency gains.