Dogus Group: Weighing Partners for Garanti Bank  Merger and Acquisition Case Solution

Therefore,the problem faced by the Garanti bank was that in 2005, the bank had tooperatealone or form apartnership with Dogus Group in order to achieve its growth and to develop the Turkish economy.

Qualitative Analysis 

SWOT Analysis:

Strength

  • The Garanti bank is a well-known and a reputable brand.
  • Garanti has a superior IT infrastructure,it launched online banking and, Acik credit card, it was the first bank in Turkey that implemented online and phone banking;and within a few years, more than 10% of all transactions were processed online.
  • Garanti was Turkey’s leading bank in trade financing, foreign currency loans, cash management, commercial banking, and online banking.
  • The bank has high quality asset;along with that, the bank had64% collateralized loans, which means bank has low default risk.
  • This is the only bank thatis using an economic value added method in order to evaluate the performance of the employees and reward on the basis of the employees.As the employees become motivated,theyenhance productivity of the company.
  • The bank’s ROE would have increased by 19.5% in 2005 had it decided to expand its business alone and compete with its competitor.

Weakness:

  • The bank wants to grow the business within Turkey,which is why bank has to reshape the balance sheet toreduce the debt.
  • More debt ratio
  • If the bank operates alone, it requires a great deal of crisis management.

Opportunity:

  • The bank has growth opportunities in retail banking, Garanti registered a compound annual growth of 113% in local currency loans, 25% in foreign currency loans, 48% in local currency deposits, and 9% in foreign currency deposits.
  • The bank has opportunity to expend its brand outside of the country.
  • If the bank launches Bonus Card and it can become Turkey’s second most popular credit card.Whenever bank provides a credit card, it will enhance the spending of the country and it will ultimately yield inpositive effect on the economy of turkey by increasing the GDP.

Threat

  • In 2001, when Turkish economy will go down, it can affect the banking industry, so as a result, most of the foreign industries came toTurkey, which increased the competition in banking industry.
  • Bank believed that the experiences through which the bank went through during the difficult times in the industry in 2001 that the bank had to provide training to its employees, which enhanced the knowledge of the customers and created new skills so that performance of the bank could be enhanced.
  • Along with that,to support its business customers, Garanti operated a number of subsidiary financial services firms, including trade finance in Europe and Russia.Only about 5% of net income came from operations outside Turkey………………
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