Finansbank 2006 Harvard Case Solution & Analysis



1.) National Bank of Greece (NBG) Valuation of Finansbank:

The method adopted by National Bank of Greece in order to analyze the future value of Finansbank was discount future profit. In accordance with this method dividend will be available to all shareholders. National Bank of Greece (NBG) used two different techniques for estimating cash flows. First assumption was based on 5 year period forecasting from 2006 to 2010 and second assumption was based on 20 year period estimation from 2011 to 2030. NBG estimation for valuation of Finansbank can fail in future because projections’ result from using discount future profit are not confirmed. Therefore, NBG’s valuation of Finansbank could result in losses as unforeseen future events can cause change in anticipated future value of the  Finansbank and  can make these estimations completely invalid.

However, NBG’s estimation about stable growth of Finansbank in the future may result in the growth fluctuation because by using discount future profit it is difficult to predict that Finansbank will earn growth in coming future years. The value that NBG anticipated for Finansbank ranges from US $ 4,762 million to US $ 5,937 million and did not give an exact estimated figure.

2.) YF Securities Valuation of Finansbank:

YF Securities (Turkish brokerage house) used dividend discount model in order to estimate the valuation of the Finansbank and did not use many assumptions in the valuation of Finansbank. The value which institutions anticipated for Finansbank’s shares was YTL 6, 7729 (US $ 5,702 million). YF securities anticipated valuation of Finansbank for the period 2007 to 2015.

YF Securities estimation for Finansbank may not increase at the anticipating rate of dividend growth in the future. It is difficult to forecast rate of dividend growth accurately for the long-term by using dividend discount model. YF Securities estimated valuation for Finansbank by assuming data for 8 years whereas; there are many challenges associated with dividend discount model to correctly forecast the growth rates of dividends in the long run. Dividend discount models can be of greater use when used for making short or medium term estimation of dividend growth.

3.) Bender Securities Valuation of Finansbank:

Bender Securities (a subsidiary of Deutch bank) used different profitability techniques to forecast the valuation of the equity, which includes return on average equity (ROAE), target value and growth rate. Bender Securities made estimation from 2006 to 2011 for Finansbank valuation.

Share holder equity estimation by Bender Securities showed increase in the shareholder equity from forecasted US $ 1,899 million to US $ 4,048 million. These estimations are based on the historical performance of the Finansbank. Return on average equity (ROAE), which determines the company’s profitability was forecasted 45.8% in 2006 and from 2007 to 2011 was constant each year at 24 %; this showed a decline in average return on equity of Finansbank........................

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As the requirements for financial policies and rewards of ownership concentration affects the need for and the process of restructuring? This event gives students the opportunity to analyze the restructuring of Turkish multinational business group through the merger. Finansbank is a bank headquartered in Turkey with additional operations in the Netherlands, Switzerland, Russia, Romania and Ukraine. It was founded in zye H sn in 1987, and in April 2006, the National Bank of Greece (NBG) offered to buy the portion of the pot. Students can consider what factors contributed to the growth and success of Finansbank. In order to assess the conditions of the proposal then NBG, they can evaluate this assessment of the bank and to analyze why the proposed transaction is structured in such a way that preserves zye bet, and buying non-Turkish operations. Students may also consider a proposal from the point of view of the minority shareholders. "Hide
by C. Fritz Foley, Linnea Meyer Source: Harvard Business School 18 pages. Publication Date: May 14, 2008. Prod. #: 208108-PDF-ENG

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