Synergy Tracking in Bank Mergers Beyond the Integration

Synergy Tracking That Survives the Integration

Almost 70% of mergers miss their revenue targets. Synergy tracking with owners, budgets and a two-year view shows what a bank merger really delivers.

Alexander Kiel

Business Analyst · Banking & Wealth Management

13.11.2025 · 8 MIN READ · BUSINESS INTEGRATION

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1. Set the Baseline Before Closing

2. Break Targets Into Owned Initiatives

3. Count One-Time Costs Too

4. Write Savings Into the Budget

5. Track Revenue Gains Separately

6. Keep Tracking After the IMO Closes

Sample case: CaixaBank

In short

FAQ

Most merger cases rest on promised savings. Many of them are too optimistic. Bain found that on average 70% of companies announced higher synergy estimates than would be expected from size alone. In a Bain survey of 352 global executives, overestimating them was the second most common reason for disappointing deals.

Cost targets are usually met, revenue targets rarely. McKinsey found that about 60 percent of mergers delivered almost all of their planned cost savings, while almost 70 percent fell short on revenue.

The gap often opens after the integration office closes and nobody owns the numbers any more. Would your bank still know in two years which savings the merger really delivered?

Illustrative chart of merger savings delivered by half-year over three years, rising from 10% to 100% of the yearly target, with 45% arriving after the integration office closes and finance takes over tracking

STEP 1

Set the Baseline Before Closing

Fix the cost base of both banks before closing. Take the last twelve months by function and cost type: staff, IT, premises and third-party spend. Remove one-off items and agree the figures with both finance teams. Freeze the baseline and change it only with a documented decision. Without it, every later saving can be argued away.

Bain advises using benchmarks and the industry-specific scale curve to know your starting and desired end points. McKinsey warns against copying a standard set of targets: If you have a one-size-fits-all set of synergy assumptions across three different companies, it’s probably wrong. Alvarez & Marsal also recommends developing a robust financial and headcount baseline and revisiting it during the integration.

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Take twelve months of costs by function and cost type

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Remove one-off items and agree the figures with both banks

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Change the baseline only through a documented decision

Could your finance team show the agreed cost baseline of both banks on one page?

Keep in mind: A baseline built after closing already includes the first cuts. It then makes the savings look smaller than they are.

STEP 2

Break Targets Into Owned Initiatives

Next, break each target into initiatives small enough to manage: close a data centre, merge two payment teams, renegotiate a market data contract. Give every initiative one business owner, a euro amount, a start month and a measure that proves the saving. Owners sit in the business lines, not in the integration office.

Alvarez & Marsal puts it simply: Each metric should have an accountable owner. In McKinsey's research, one M&A leader described the aim as a plan where the ownership is clear from the board to the front line. My article on how to build the integration team shows where these owners sit in a bank merger.

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Split every target into initiatives with a euro amount

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Name one business owner for each initiative

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Define the measure that proves each saving

Does every euro in your savings target have a named owner outside the integration office?

Keep in mind: Initiatives owned by the integration office disappear when it closes. Put ownership in the business lines from the start.

STEP 3

Count One-Time Costs Too

Every saving has a price: severance, retention awards, parallel running, data migration and advisers. Track these one-time costs per initiative, next to the savings they buy. Report both on the same page, so the steering committee sees the net figure. An initiative whose costs grow faster than its savings needs a decision, not another month of reporting. On a decommissioning project I worked on, internal delays extended the timeline twice, so the overhead costs ran longer than planned.

McKinsey found that many deal teams neglect or underestimate the impact of onetime costs. One bank in its sample underestimated the integration costs by a factor of three. In a later review, McKinsey put average one-time costs at 1.1 to 1.2 times the yearly run-rate savings.

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Record one-time costs per initiative

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Show savings and costs on the same report

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Escalate initiatives whose costs outgrow their savings

Does your steering committee see the net saving or only the gross figure?

Keep in mind: One-time costs often sit in a different budget from the savings. Bring them together, or the business case looks better than it is.

STEP 4

Write Savings Into the Budget

A saving counts only when it shows up in the budget. Once an initiative is approved, cut the cost centre budget by the agreed amount for the year it takes effect. The line manager then owns the lower budget like any other target. Finance confirms each saving against the baseline before it is reported as delivered.

Alvarez & Marsal recommends embedding the synergy plan into Business as Usual (BAU) budgets and targets with the help of the Finance function. This also minimises the risk of ‘synergy fatigue’ that sets in when the initiatives run apart from normal business. The firm adds that strong financial governance is also key to report savings on a consistent basis.

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Cut cost centre budgets by each approved saving

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Let finance confirm savings against the baseline

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Report a saving as delivered only once it is in the actuals

Which of your planned savings are already written into next year's budgets?

Keep in mind: A saving that lives only in the integration tracker can be spent twice. Once it is in the budget, it is hard to reverse.

STEP 5

Track Revenue Gains Separately

Revenue gains need their own tracker. They take longer, depend on client behaviour and are easy to claim without proof. Split them by source: cross-selling to the other bank's clients, new products and pricing. Measure leading indicators such as client meetings and offers made, then lagging ones such as new mandates and revenue. Track client attrition as a negative item.

McKinsey found an average gap of 23 percent between goal and attainment for revenue targets. Revenue gains took on the order of five years rather than two. One integration leader admitted that the team lost momentum two months after close because nobody tracked them. My article on transferring clients between banks shows how to watch attrition in the first weeks.

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Split revenue targets by source

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Track leading and lagging indicators

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Record client attrition as a negative item

How would your bank prove that a new mandate came from the merger?

Keep in mind: Revenue gains are easy to claim and hard to prove. Agree in advance what counts, or every new client becomes a merger success.

STEP 6

Keep Tracking After the IMO Closes

The integration office usually closes once systems are merged, but many savings arrive later. Before it closes, hand the tracker to finance with named owners, open initiatives and agreed reporting dates. Keep a quarterly report to the executive committee until every initiative is delivered or formally dropped. Then compare the result with the original business case.

McKinsey recommends tracking results against the plan for two years and then calculating retroactively what the net present value of a transaction turned out to be. It also notes that even highly seasoned buyers rarely capture data systematically enough to improve their estimates for the next deal. My article on automating weekly reporting with Excel and VBA shows how to keep such a tracker running with little effort.

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Hand the tracker to finance before the integration office closes

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Report quarterly until every initiative is closed

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Compare the final result with the business case

Who in your bank will report on the merger savings once the integration team has gone?

Keep in mind: Many savings arrive after the integration office has closed. If nobody reports them, they are never confirmed.

Why the Secret to Success Is Setting the Right Goals | John Doerr (Chairman @ Kleiner Perkins)

SAMPLE CASE

CaixaBank

CaixaBank's shareholders approved the absorption of Bankia in December 2020. The bank estimated yearly cost savings of around €770 million. The legal merger was completed on 26 March 2021. The operational integration was planned before the end of 2021.

Four months after the legal merger, CaixaBank raised its yearly target from €770 million to €940 million. Its quarterly results then showed the expected path by year: ~€112M, ~€755M and ~€940M for 2021, 2022 and 2023. A labour agreement covered 6,452 employees through voluntary redundancies. In November 2021 the bank completed the technology integration with the migration of a total of 10.4 petabytes of information.

At its Investor Day in November 2024, CaixaBank showed cost savings of €940 million for 2023 against the initial target of €770 million.

Key takeaway: CaixaBank published a yearly savings path, updated it each quarter and tied it to concrete measures such as staff exits and the technology migration. A bank that tracks savings this openly can show what the merger delivered long after the integration has ended.

"We have decided to raise our synergy targets to €940 million per year."

Gonzalo Gortázar (CEO @ CaixaBank)

In Short

Synergy tracking that survives the integration rests on six moves: a frozen baseline, owned initiatives, one-time costs on the same page, savings written into budgets, a separate revenue tracker and a handover to finance before the integration office closes.

The result is a figure the board can trust: what the merger promised, what it cost and what it delivered.

Frequently Asked Questions

What is synergy tracking?

Synergy tracking is the regular measurement of the savings and revenue gains a merger promised, against a fixed baseline. Each target is broken into initiatives with an owner, an amount and a date. The tracker shows planned, delivered and at-risk amounts together with the one-time costs. It usually runs for two to three years after closing, well beyond the integration itself.

What is the difference between cost and revenue targets in a merger?

Cost targets come from removing duplicate costs, such as overlapping teams, systems, premises or contracts. Revenue targets come from selling more, for example by cross-selling to the other bank's clients or launching new products. Cost savings are usually more certain and arrive within about two years. Revenue gains depend on client behaviour, take longer and are much harder to prove.

What is a dis-synergy?

A dis-synergy is a negative effect of a merger, such as lost clients, lost revenue or extra costs that would not arise without the deal. Typical examples in banking are clients who leave after a rebrand, advisers who move to competitors and higher costs during parallel running. A complete synergy tracker records these effects next to the planned savings and the one-time costs.