FN0363 INTERNATIONAL FINANCE AND FINANCIAL MANAGEMENT

Section A   Academic Essay 

(50% of Marks; 1,800 words)

On 7th of June 2017 Banco Santander (Santander Bank) agreed to buy rival Banco Popular (Popular Bank) for the symbolic price of one Euro. This deal may have come as a surprise to Santander shareholders as just 24 hours earlier European regulators had given over 30 potential suitors the option of buying the highly troubled Banco Popular. Banco Santander’s share price leapt 5% at the release of the takeover news.

“Santander worked through the night, lining up underwriters for a €7bn share issue to fund the deal and securing approval from the US Federal Reserve because Popular has a small business in Florida. Santander was told shortly before 6am on Wednesday that its offer to buy the bank for only €1 had been accepted.

The deal was signed an hour later. A crucial factor in Santander’s bid succeeding was that, unlike rival bidders, it did not ask for any state guarantees against hidden losses lurking inside Popular’s books. One executive who worked on the deal said: “It was one of the nights to remember. I did not sleep at all and just went home a few hours ago to shower.”

Spain’s Santander saves Banco (not so) Popular, Financial Times (2017)

Banco Popular was a very troubled banking institution, with over 37bn euros of highly toxic loans on its balance sheet and rapidly evaporating liquidity as bank depositors started a bank-run on deposits. In an astonishing single night’s work Banco Santander had made the decision to buy the company, about how to fund the acquisition, how much the acquisition would add to their shareholders value and  believed they had done sufficient due diligence to protect the interests of their existing shareholders.

In an academic essay format, you are to consider the Banco Santander acquisition of Banco Popular. Financial Times news articles regarding the acquisition can be found below to support students:

You are expected to use this articles and your access to FT resources as the starting point in your wider investigation and research into the deal. You should be using further resources beyond this initial starting point.

Specifically, you are to choose two of the following three tasks (25 marks each) and write a single academic essay that addresses both of the tasks selected.

1. You are required to critically evaluate the literature regarding the success or failure of merger and acquisition activity and conclude with an informed judgement as to whether the evidence would suggest that shareholders of Banco Santander should welcome or be wary of M&A activity generally (i.e. for all M&A), and specifically the purchase of Banco Popular. Your answer should specifically include reference to the timescale in which this deal was completed, and address whether or not this should factor into shareholders evaluation.

 
2. You are required to come to a judgement regarding the ability of managers to judge the value of another company when engaging in acquisition activity. Your answer should specifically show an engagement with the academic literature regarding both the efficiency of the stock market and share valuation. Your answer should conclude with an evaluation of the decision by Banco Santander to buy Banco Popular, and conclude whether or not you feel a symbolic single euro valuation was appropriate.
 
3. You are required to critically discuss the impact of cost of capital & capital structure on the ability of companies to generate acceptable returns for shareholders. Your answer should display a thorough and extensive engagement with appropriate academic literature and come to an informed judgement regarding the overall impact of capital structure on the ability to generate wealth. Your answer should specifically examine the Banco Santander acquisition of Banco Popular deal which involved a 7bn Euro rights issue of shares, and the assumption of 37bn Euros of (mostly “toxic”) loans as part of the deal.
Section B  Statement of Learning

 

(50% of Marks; 1,000 Words + Blog Appendices)

 

  1. Students must submit a Statement of Learning of no longer than 1,000 words in length which summarizes their learning experience on the module and their reflections on their module experience. The statement of learning should:

 

    1. Reflect on your ability to relate what you are learning in the classroom (lecture and seminar) to real world business activities, events or decisions. (8 Marks)

 

    1. Effectively communicate your own learning journey while on the module, highlighting how you have engaged with the study of finance and financial management on a personal level through the module’s curriculum and assessment process (10 Marks)

This Statement of Learning should be no more than 1,000 words in length and is worth 18 Marks.

NOTE: The Statement of Learning should be a cohesive document rather than a week-by-week summary. Students should not in their statement be repeating their Blog posts, but instead be referring to them as evidence to reinforce their points.

  1. This statement is to be supported by at least eight appendices which are clearly marked as print outs of the students web-logs (blog’s) on their student experience. The Blog entries should be posted with a time-stamp so it is clearly seen that the students have engaged in a reflective learning experience in a continuous way. The Teaching and Learning Plan for the module has more specific details on the required Blogs.

 

Students will receive 1 mark for each appendix related to a weekly Blog post submitted (8 marks total). Assessed blog posting should commence by students no later than the end of the 4th week of teaching (Assessed Blog 1) and the last Blog post should be no later than the end of the last week of teaching. Students may (and are encouraged to) submit more than this minimum evidence to support the Statement of Learning.

Appendices should also be clearly marked in the assignment’s contents page with the date and time of when the Blog post was made.

  1. Students may include more than just their own blog posts and are encouraged to comment and enter into discussions with their fellow students Blogs. These interactions should be printed out and submitted in the assignment appendices. Students are encouraged to interact and reply to blogs and students should make sure that their Blogs are allowing comments.
  2. Each of the students Blog posts will be marked on their overall depth of reflection on a real world contemporary issue; the depth of ability to critically assess and analyse; and the depth of their ability to reflect on what they are being taught in seminars, lectures and through the directed reading relates to the real world which they are discussing (3 Marks for each blog. Max. 24 Marks for all 8 blogs).

Good Blog posts would be in-depth, considered, and displaying a mature ability to analyse, disseminate and discuss. Poor Blog posts are descriptive in nature and display only a surface appreciation of the issues. There is no minimum length for blog posts, however students are expected to realise that in-depth reflection and developing evidence of critical thinking can take time. It is strongly suggested that students spend at least an hour and a half a week considering and writing their Blog posts. Highlighting exemplars of good blogs from previous students is a key part of the seminar activities related to the Blogging. It is advised that students use a free Blog service like Google’s Blogger

(https://www.blogger.com/features ) Students are advised to use the Blogger Youtube channel which has a number of helpful videos on how to improve your blog posts:

http://www.youtube.com/user/BloggerHelp/videos

Students are not restricted to Blogger, but if they decide to use another service, they should be clear with their peer support groups as to what they are using.

  1. Students may design their Blog how they wish, however it is requested that they both refrain from links to unsuitable websites and that they remember the university’s internet usage policy when posting and designing their blogs.
  2. In the 3rd Seminar (after students should have made their Trial Blog posts) time will be allocated to some discussion and feedback to students in the classroom as a class discussion regarding the quality and depth of their respective first blog posts. It is thus critical that all students have made their Trial blog posts before the 3rd seminar. In the 3rd seminar time will also be made for students to disseminate the internet addresses of their Blogs to their peer support group. Time will again be made in week 9 to look at both the assignment and the blogs in a classroom discussion.
  3. The Trial Blog & Assessed Blog Two, Five and Seven are “Multimedia Blogs” in which the student is directed in the Teaching & Learning Plan to watch a particular documentary, movie or other multimedia resource which has been placed on Blackboard. Students are reminded that these blogs are explicitly not for you to simply say what the programme was about, and that blogs which simply reiterate what the resource said, rather than concentrating on reflection and student learning, will receive very poor grades.

 

Students are advised to consider what they Blog about carefully before starting the process and to remember that the entire point of the weekly blog is to support and provide evidence for the 1,000 word Statement of Learning. Before you start the process consider the marking of the Statement of Learning (see point 1) and craft your Blog posts so that you’re able to maximize the evidence you can show in your statement. What you decide to Blog about and reflect on is your choice as a student. However, as general advice:

    1. You should try and relate your Blog post to the subject matter of the weekly lecture and seminar to maximise your marks (remember 8 marks in the Statement of Learning are for ability to apply classroom ideas to the real world). Use the Teaching and Learning Plan to help you.
    2. Be creative and don’t view this as a chore or requirement. Try and take time rather than rushing this. The Blog is marked on depth of reflection and consideration. Remember that deep and considered blog posts will allow you to evidence more and maximise your “critically assess” and “critically analyse” 10 marks in the Statement of Learning.
    3. Bring in contemporary issues or things happening that week in the news. Use the Blog to display what you’ve been reading about. Perhaps before blogging have a search through the Financial Times for that week (Using Nexis UK via NORA) or have a read of what other top Business Bloggers are Blogging about. Try and make your blog posts as contemporary and timely as possible to maximise marks. Don’t Blog about something what happened last year, Blog about things happening now, and things you may want to talk about in interviews with future employers.

In summary:

Marks breakdown:

18 Marks For Statement of Learning

1 Mark for each of the required Blog posts (8 Marks Total)

3 Marks for content of each Blog post (24 Marks Total)

 


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