Some forced marriages in finance firms to end in separation
Some small finance companies which were, literally, ‘forcefully’ paired off by the Central Bank (CB) in the last regime in a bid to reduce the firms in this sector are gearing for a separation as their ‘couplings’ have failed, officials said. At the time small companies were encouraged to merge or promoted to join with their bigger counterparts numbering 20 big finance companies (in terms of asset size) holding 90 per cent of this business in order to ensure their capital base is sound. Despite the CB insisting then that all this was voluntary, many large firms who got into these liaisons now say that they were forced marriages, according to officials.
“At least three firms are trying to sell their subsidiary finance companies. They are on the market,” a stock market source told the Business Times. Analysts say that mergers between two firms characteristically amplify the differences between two organisations, making nearly every merger combination feel like a marriage of opposites. They said that given the woes of the balance sheets (including fleets of commercial vehicles), unprofitability and at times negative net interest income most mergers during the past regime are failures.