He said that the first thing that
parties entering merger must be clear about is the objective behind the
merger. In many cases there is a lack of clarity when it comes to the
objective, said Gautam.
Other issues that crop up during the merger process are electing representatives on the board of directors, selecting the executive head, fixing the share swap ratio and reorganizing the staff.
Gautam pointed to mutual understanding as an ideal way of fixing share swap ratio, as has been seen in recent mergers.
As for staff reorganization, he said it is important to execute everything in a transparent manner to win the confidence of the staff.
Gautam said post-merger problems include working culture, software in use, hassles of data migrations, among others.
When asked whether the merger process among banks will continue in future given Nepal Rastra Bank’s intention to reduce the number of BFIs by half, Gautam said no big bank would opt for a merger willingly. Only those banks that are in trouble will seek merger as the promoters of such banks would be willing to give up their posts to save their investment, said Gautam.
He pointed to the merger between big banks like NIC and Bank of Asia as an exception. Among other things, they were compelled to merge after NRB urged them to settle their cross-holding issue. He cited the cases of merger process between Everest Bank and Nepal Investment Bank, and that between Siddhartha Bank and Kumari Bank that failed to materialize as an example why merger between big banks is difficult.
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Other issues that crop up during the merger process are electing representatives on the board of directors, selecting the executive head, fixing the share swap ratio and reorganizing the staff.
Gautam pointed to mutual understanding as an ideal way of fixing share swap ratio, as has been seen in recent mergers.
As for staff reorganization, he said it is important to execute everything in a transparent manner to win the confidence of the staff.
Gautam said post-merger problems include working culture, software in use, hassles of data migrations, among others.
When asked whether the merger process among banks will continue in future given Nepal Rastra Bank’s intention to reduce the number of BFIs by half, Gautam said no big bank would opt for a merger willingly. Only those banks that are in trouble will seek merger as the promoters of such banks would be willing to give up their posts to save their investment, said Gautam.
He pointed to the merger between big banks like NIC and Bank of Asia as an exception. Among other things, they were compelled to merge after NRB urged them to settle their cross-holding issue. He cited the cases of merger process between Everest Bank and Nepal Investment Bank, and that between Siddhartha Bank and Kumari Bank that failed to materialize as an example why merger between big banks is difficult.
src sharesansar
