Getting the best out of bank mergers and acquisitions – the road to recovery (2)

“For acquiring companies, the excitement is almost always about where they are going – that is, their strategy for gaining greater growth and productivity. But when mergers fail, it’s often because no one focused on who they are – that is, their culture, which is critical to successfully bringing different groups of people together’. Punit Renjen

Hello Readers, I started this series last week enumerating the reasons why we need to move on and make the best out of the current precarious situation in the Ghanaian banking industry: collapses, consolidations, intended mergers and acquisitions. I also gave examples of perceptions of staff who find themselves involved in these new business environments. While some have positive perceptions, others also have negatives ones. Well, it is the attitude of such people that will determine their altitude eventually.

Assuming you encounter a mountain in your path, would you consider it an obstacle or an opportunity? There are several ways of looking at the situation. After all you can climb the mountain to reach the other side, go around the mountain to reach the other side, or dig a tunnel through if all other means prove futile! Perhaps in doing that you will find some gold or even a fortune. In these present times, bankers must shift gears to the level of creating a transformation shift in everything they do. The blame game is over and it is time for action. Let us examine some challenges ahead of merger processes which bankers need to consider and manage. Mergers and Acquisitions (M&A) are common and if well managed can lead to great successes and benefits.

Challenges ahead OF MERGERS and ACQUISITIONS

  • The merger and resultant bigger entity has its unique set of challenges. Assuming your bank staff strength is 800 and you have to merge with a bigger bank with 1,500 staff, the scale of the task is substantial given the new total staff strength of 2,300. It will pose a huge test in terms of integration of roles, salary, end of service benefits, pension structures and, no less importantly, work cultures.
  • One bank may be unionized while the other is not. Much of the opposition from the bank unions stems from concerns relating to these issues. In a unionized bank, the union executives may be wielding a lot of power, sometimes resulting in their National Executive coming in to meet the Bank management to re-negotiate certain demands for the local unionized staff. There have been cases of stalemates resulting in agitation and laying down of tools! In some cases, there are fears about the prospects of promotion which may be hampered. Seniority may now need to be rationalized and this sometimes end in disaffection. I remember the case of the acquisition of National Savings and Credit Bank (NSCB) by the Social Security Bank, (SSB) now Soceite General. One of the Managers was made an Officer after the acquisition, and she went through a lot of stress before adapting to her new position. Likewise, we heard of cases of managers in the erstwhile UT Bank now made Chief Clerks in the bigger GCB Bank after its purchase in August 2017. Again, there was a lot of apprehension among staff of the erstwhile The Trust Bank when it was going to be acquired by Ecobank.
  • Customers of a smaller bank which may be more SME-focused also face apprehensions when their bank is being acquired or merging with a corporate brand. Many SMEs in Ghana are more comfortable dealing with smaller banks due to the usual sense of belongingness and care they receive. Initially, some customers may be uncomfortable having to deal with a larger, more impersonal relationship banking system, one where the size of their accounts may be viewed as “small fries”.
  • For the regulators, the new entity will be posing challenges on oversight issues. The size of new entities also possess huge challenges for regulators.
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Overlooking the cultural implications

Sometimes banks concentrate on the figures and the attraction of more profits on paper. However, the human capital and its attendant cultural implications cannot be over-emphasized.  Let us ask ourselves some pertinent questions:

  • What is the mission, vision and values of the shareholders in the two banks, and are there any clashes between the two banks’ objectives?
  • Are there clear religious and cultural inclinations regarding their bank’s policies on certain ethical-related transactions?
  • If a bank does not finance breweries, what happens when a merged bank now contains alcohol manufacturing companies?
  • What is the merged bank’s policy on promotion and reward systems?
  • What are its inclinations towards young staff or older staff? Any career developmental plans for staff?

Failure to assess the cultural adaptability and not just the financial advantages, is one reason why many bank mergers ultimately fail. Throughout the merger and acquisition process, managements of banks need to thoroughly communicate and double-check that employees are adapting to the change. I heard someone say that before the acquisition process, staff of The Trust Bank, who had the upper hand experience in SME relationships, were re-trained and shifted round for them to be able to work in any department when the “Oga” or “Master” Ecobank swallowed them up. I believe it because I found out that many of my friends who were in The Trust Bank eventually landed some good positions in Ecobank. Once again, one’s attitude clearly determines one’s altitude.

Seamless transitions are key to Customer Impact and Perception

In cases where the banking software of the two banks have to be integrated, adequate training and re-training is a must. The effect of the inadequate communication about the change of accounts, ATM cards, internet banking and many digital platforms result in customers feeling abandoned. In areas where the branch staff are all moved to other branches, customers feel abandoned. Some months ago, I felt the same way when I entered former UT Bank, East Legon Branch and met a total changeover of staff who looked at me without any sign of recognition nor smiles when I entered the banking hall. My Manager was not there, the Relationship manager and Customer service staff were different. Even with my banking background, I felt like an orphan for some time until my new Relationship manager, Zara Mohamed took over and gave me the great relationship I had missed. I therefore entreat management of consolidated, merged and acquired banks to take these little things into consideration. Now that digital banking is keeping customers outside the banking hall, the only attraction to entering the physical space is to experience a great banking relationship.

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While still discussing the emotions of customers, we have to always remind ourselves that without customers, there is no bank, While undergoing an M&A (Mergers and Acquisition) event at your bank, it’s critical that you pay attention to the impact it has on your customers, especially the those from the smaller bank. After the collapse of Ghana Cooperative Bank and Bank for Housing and Construction in January 2000, many customers felt stranded and instead of going to bigger banks, chose to continue their banking relationship with other local banks where their needs could still be met without much officiousness. Customers often respond very emotionally to a bank acquisition, so it’s essential that you manage customer perception with regular, careful communication. Once the merger or acquisition is fully underway, remember to consider the impact on your customers at every stage: Changing technology platforms to financial products could impact your customers negatively if you don’t pay attention.

I will pause here. Next week I will continue the series by sharing real life experiences of the effect of mergers, consolidations and acquisitions on staff, work culture, Teambuilding, staff attrition, deposit mobilization and many more. Dear managers, while preparing for your M & A event, please put your eyes and ears on the ground. The fraudsters are also planning their swoop. They may be planning to have their last laugh before they leave your bank alone. SHINE YOUR EYES.



Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.


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