MERGERS AND ACQUISITIONS IN BANKING SECTOR-A STUDY FROM HR PERSPECTIVE

FOCUS

Globalization paved way for competition Economies exploring better strategies Challenges, co-petition, survive Banking Sector Mergers and Acquisitions Late seventies, fillip in the post-liberalized period Consolidation, result orientation and effectiveness Financial aspect along with other factors

METHODOLOGY

Conceptual Paper, Secondary Sources Different countries of the world Issues and activities of HR in Banks Basic statistical tools Build better future Tentative models

Mergers & Acquisitions

Economic reforms, restructuring Expansion and diversification Core competencies, fillip after 1994 takeover code formulated United States in 1890-1904 (first phase) end of the World War-II (2nd phase) India 1180 proposal involving 2400 companies during 1976-1986

1995 USA electric power industry Banking sector mergers valued at -$37.2 billion Deregulation, competition, mid-sized industries strategy to avoid being acquired For achieving efficiency, cost effectiveness Dynamics, visionary and component & quality improving Merger-two/ more companies combine to one company Amalgamation of assets, liabilities shareholders interest, businesses of the companies

Merger-absorption, consolidation To overcome slow growth & low profitability

To enhance retail loan portfolio, reducing NPAs Improving performance Reviving sick condition of the financial institutions e.g. merging of HDFC & Times Bank, Centurion Bank & Bank of Punjab, ICICI & B.Madura, Oriental Bank of Commerce & GTB Bank Roy (2003)public and private sector merging M & As growth worldwide @42% a year (UNCTAD, 2000) Developed countries import role in sell and buy

HR DIMENSION OF M & As

Jacques Altali in next twenty years no more than four/ five global firms and millions of small temporary firms Public Sector Banks shed over 90,000 jobs For enhancing productivity at a lower cost Any time, Any where Banking system, customers desire ness, M & As failstaff hostility, Integration failure( ILO ) Failure differences in culture, Depersonalization in financial relationship Scandinavian countries more degree of flexibility for M & As Customer attitude not positive for giving personal details in internets Sharp reduction of no. of branches Even employees are reluctant to friendly takeovers

Cultural differences creating disappointment UKs Morgan Grentell Group acquiring Germanys Deutsches Bank
Loss of jobs USA: Chemical Bank &Chase Manhattan Bank eliminated 12000 jobs

HUMAN FACTOR IS NEGLECTED

Loss of talented resources

-South Africa, Scandinavian countries, South East Asian coutries.

Table: HR of Czech Republic Bank indicat 1994 ors emplo yees 1995 1996 1997 1998 1999

58920 61073 60137 57082 52760 48955

Emp./ bank

3467

3411 18 3029

3172 19 3252

2467 23 4177

2200 24 4639

2006 24 5134

Emp/b 17 ankunt Popula 2981 tion/ba nk unit

Australia, Tunisia, European countries HR issues not considered importantly 1990 London recorded less than 10000 Practices in different countries like Western Europe, United Kingdom, United States, Canada, Japan and Australia. CHALLENGES
Indian Banking Scenario: M & A is a burden Integration of diverse backgrounds a difficult task Managing HR in different phases of M & As Cope with changing environment, Competency building,

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 INFORMATION SOCIAL
OBLIGATIONS

NOTIFICATION COMPENSATION REDPLOYMENT

LAWS AND PRACTICESOF THE COUNTRY

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Figure-II: Problematic Issues in M & As

STRESS

IR CLIMATE

RESISTANCE

SOCIAL FABRIC

DEMOTIVATION

CO-DETERMINATION LOW MORALE

SOCIAL DIALOGUE

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Figure-III: HR Activities in M & As

PREM & A PHASE M&A PHASE POSTM & A PHASE

INVOLVEMENT INFORMATION SHARING INTEREST OF STAKE HOLDERS

CONFIDENCE BUILDING FEAR PSYCHOSIS POSITIVE OUTCOME

CHANGE MANAGEMENT TRAINING & DEVELOPMENT RESKILLING & CULTURAL INTEGRATION APPRAISAL SYSTEM REDEPLOYMENT

FINANCIAL NECESSITIES

SOCIAL RESPONSIBILITIES

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( PRE-COMBINATIONCOMBINATIONSOLIDIFICATION )

Figure-IV: Impact of M & As

Mergers & Acquisitions SECTORAL EMPLOYMENT Decline in permanent Employment Job insecurity Job instability Non-standard forms Of work Branch Closure Staff Retrenchment Employment Mobility and Turnover high Cost Savings ( Reduce operating costs, increase income-cost ratios ) Skill up gradation ( obsolete, general trend) Corporate Restructuring Career and Succession plans Small and Medium sized enterprises

Loss of Quality of service Indirect Unorganized Employment ESSENTIAL Commitment Competent Cooperate

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SUGGESTIONS:

Greater care for Human Resources Regulatory framework by Govt. should emphasize the HR Interest of both the banking industries should be taken Communication, training & development activities Involve Trade Unions in decision making process Talent retention strategy Recruit specialist officers Performance linked incentive

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VISION

Where the vision is for one year, cultivate flowers; Where the vision is for five years, cultivate trees; Where the vision is eternity, cultivate people. This is no time for ease and comfort, it is the time to dare and endure. Winston Churchill

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SUCCESS Human Resource Finance Technology

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(1,9)

(9,9) Team management Task Management

People oriented

Country club Management Impoverished Management

MIDDLE OF THE ROAD MGT.

(1,1)

Task oriented

(9,1)

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conclusion:
Leadership Development -Front line managers with HR skills Win-win situation Telling, selling, delegating, participative: requisite skills Upanishad: sahana Bhabatu,sahanabhunaktu,
sahabiryam karababahe, tejaswinam aditmastu ma vid Visa vahe, om santih, om santih, om santih.

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THANK YOU ALL.

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