1.

Introduction
1.1 Background of the study
Emerging ideas creating a market dominance with fresh perspectives yet a nightmare for
the brightest of human resource, merger and acquisition of institutions and companies is no
less than a kaleidoscope. Huge numbers of Banks and Financial institutions rapidly growing
globally has created an environment of utmost competition, mostly unhealthy than a
healthy one. In a country like Nepal with a small population of 28.61 Million, the number of
Banks and Financial Institutions is 144, which includes 21 class “A” categorized Commercial
Banks along with 19 class “B” categorized Development Banks. In order to improve
competitiveness, manage economies of scale, create synergies and increase a dominance in
the market through increment in the market share, Mergers and Acquisitions today has
become a regular strategic activity. Along with the ample opportunities of growth brought
by a Merger or Acquisition, the difficulties faced by an Institution post acquisition is
undeniable. As per the recent Harvard Business Review report, the failure rate for Mergers
and Acquisitions is between 70 and 90 percent. This shows that more than 70% Institutions
fail to create a coherent strategy for the uplifting of its financial and operational roles in
order to provide the desired shareholders return and achieve their intended strategic
outcomes. A detailed analysis and exploring of the post-acquisition financial and
operational activities of a selected Institution can be a base for further observations of the
topic.
The topic and Institution I have chosen for this paper is “An analysis & evaluation of the
financial and operational consequences of the acquisition of Kanchan Development Bank
Limited by NMB bank Limited. An analysis of post-acquisition performance of NMB Bank
Limited, a leading “A” class commercial bank of Nepal including its financial and
operational approaches, pre and post-merger ratio analysis will be done for a better
understanding of the topic.
2.1 Basis for selection of the topic