Nepal Rastra Bank (NRB) brought out Merger Bylaw 2068 aiming to get the Financial Consolidation Policy into a logical end. 84 Banks and Financial Institutions have become 33 after merging into each other as of Magh end 2072.
Merger and acquisitions bring opportunities in strengthening the organizations by increasing capital base and risk management capabilities and it contributes in creating value. However, Swap ratio, formation of Board of Directors and handling of management are the issues, which do creates hurdles in merger process.
Similarly, there are challenges relating to pre and post merger communication, cultural, human resources, operations, system, etc integration. More importantly, meeting the expectations of various stakeholders after merger is one of the key challenges.
Total 68 BFIs merged into each other and became 25 as of Poush 2071. NRB carried out study on those 25 BFIs to understand the impact of the merger by interviewing Promoters, Directors, Senior Management, Employees, Accountholders and Borrowers. 550 concerned stakeholders, 22 each from 25 BFIs were interviewed and brought out the report in Aswin 2072. A few concerning findings are:
· 17% employees responded that their motivation level has further worsened, 34% employees mentioned that their performance level has improved whereas 49% employees indicated same level as it was earlier.
· 51% Promoters and Directors mentioned that the risk management system has improved, 41% indicated that it is in the same level and 8% responded that it has further worsened after merger.
· Interestingly, 20% accountholders responded that the service delivery period has increased, which is a concern to them and 13% borrowers showed interest to change the BFIs due to merger.
On the one hand, merger is having positive impacts and it is posing threats too especially meeting the expectations of stakeholders on the other hand. Some of the BFIs have gone into de-merge process even after signing MoU and executing lots of merger procedural activities.
Then, the question arises, after all what makes a merger work and how value can be created from merger? NBI is therefore organizing a Merger Conference - 2016 titled "Merger, Challenges and Opportunities - a Local Perspective" aiming to contribute to the industry in getting the merger success. Senior industry experts who have already made the merger success and capitalizing the opportunities are expected to answer the above question rightly.
