In the Phils, bank mergers or buyouts are not new. Commercial banks, when they want to be come stronger they try to acquire other banks. FarEast bank was taken over by BPI. Solidbank was taken over by MetroBank. UnionBank now takes over IEBank. PCIBank was taken over by Equitable Bank and now, Banco de Oro takes over Equitable Bank.
Such mergers or buyouts will have implications within the respective banks.
Within the banks, redundant positions like tellers or even IT positions could be removed. An employee is not certain wether she or he will still have work for the following day.
It will likewise have implications to the depositors whether we are talking about individual or corporate depositors. A firm transacting regularly with Bank A, accustomed to its practices and know the manager and employees she or he deals with, will be faced now and will have to transact with a totally new bank management.
20 comments:
There are people who say that in order to achieve progress certain sacrifices should be made. I guess the same thing applies to these types of situations. The main purpose of Banks merging or banks buying out smaller banks is to make their respective banks bigger and better. They aim to achieve progress in their economic stature. But ofcourse companies that merge or companies that buy out other companies do not only merge their names, their products but also their employees. And by doing so there will be employees who will become more of a liability than an asset due to the fact that there will be other employees of the same position who are simply better than them. And letting go of these employees is imperative for the company in order for them to further improve their stature in the economy.
The most important people involved in a business are the employees. Second to them are the customers. In the Herman Miller company, their general motto is, "Our greateset assets as a corporation are the gifts, talents and abilities of our employee-owners... When we as a corporation invest in developing people, we are investing in our future." When a "predator" bank retrenches employees from the "prey" bank, the "predator" loses assets though they will never realize it. The "predator" bank's board of directors must think of the ethical side aside from the financial gain. If they do retrench people, they should have a backup plan for them -- and i'm not talking about separation pay or a salary advance. They should be assured with a job. The problem, however, is that there is no guarantee that the job will be of the same level and salary range. On the technical side, how will they merge the "prey's" customer records with that "predator's" records? Some computations might be changed which might result to some people mistakenly having their money lost.
I've been to this bank (name of bank withheld) with my dad several times just so I can be with my dad. Anyway, when he goes in the bank, he knows everybody. He is so comfortable with the people there that one time. The bank had been merged with another and currently and fortunately, none of the staff had been retrenched yet. But what if they were all (or just most of them) replaced? Customers would have to adjust to the new policies and new staff.
- bea tabunar
I think that buyouts and mergers are not that bad. It is evident that most employees may lose their jobs as a result from a buyout or a merger, however banks or other organizations won't opt for this choice lightly. Meaning that two merging company or selling a company definitely has a feasible reason. It could either be that they are losing money and/or no longer capable of handling and improving the business. To go back back on the point that employees lose their job; well it is a result that we cannot deny to be bad however, there is a chance that some may actually keep their jobs, therefore it's better, even if may seem harsh, that some lose their jobs than everyone lose their jobs and that the owners and investors constantly lose money.
The buying company may also give generous offers like the ones we were discussing during class.
Lastly, I think it's actually better to sell or have a merger than hold on to a losing business. Also if it was a buyout the previous owners could actually use the money they got to start a different business and in doing so they could also hire some of their old employees.
Besides I think it's better for the companies to deal with the new processes and managements than lose most of the money they had in the banks.
Bare, Katrina Shamile L.
OrgMgnt s21
merging and buyouts just means that there are banks that lack managerial skills to make their company grow... sometimes, the employees are the ones to be sacrificed...
For me, a lot of sacrifices are made in the business industry. There are times when people would just lose their jobs even though they know that they haven't done something wrong. In this case, it's like the survival of the fittest when it comes to the employees who could be removed when there are bank mergers. These employees would have to show their best and act their best just to be able to keep their job.
Although changes may be in implemented in the practices of the banks, their customers should be able to adapt to these changes even though some how, it would be hard because you are already accustomed to the old practice of the bank. But, of course, some practices should be changed. Who knows, these changes may make the business stronger and better.
These buyouts and merges simply tells that one is stronger than the other. Again, "survival of the fittest" comes to play in these scenario. I like the idea that when there will be a redundant position, you dont simply place the employees from the bank that e is taking over.They got to battle it out to earn the position they are aiming for.
Bank mergers or buyouts is a sign that big and stable banks want to control more clients that would bring them more income. This will help them to be globally competitive because of the increase in their assets. Mergers or buyouts advantage will make the clients aware that they have a more secured and stable bank. Well the down side of having bank merge is that the employees are cut down because they closed some branches.
vinno pacia
orgmgnt s21
cs-ist
for me bank mergers or buyouts are one way of keeping our bank industry alive. one of the many reasons why bank buys out other banks is because its like natures law of survival of the fittest in the jungle.. its like you should eat or you'll be eaten. same rule applies in this, if your bank is not good enough you'll be eaten by other banks well not literally but its the same idea, same idea works vice versa. in relation to the natural selection or the survival of the fittest, same thing also applies for the employees of each bank branches. if you are one of the top employees then surely you'll stay to do your job but if your not good enough then you'll get fired because of too much employees in one branch.
i think it bank merges or buyouts has both good and bad effects to our economy but of course we always go for the good of the many which is the buying or merging of banks. because if we dont do this many banks will soon go out of business and the money of those depositors of that bank will lose alot of money, and this has a big effect especially on those depositors who are big companies. if they lost alot of money because of this, it could freeze their whole business and if there business is big enough it could do heavy damage on our economy. many people could loose their jobs etc. but if these banks merge together, or buying other weaker banks they could be stronger and more reliable and many people would invest their money to these banks then they could buy more banks or merge again and again until maybe there is only one bank standing. as for the ones who will lose their jobs because of redundant position of bank branches im sure they could find other jobs or start new businesses of their own with the money they got from retirement or something ^^;
I'd like to support Paul's opinion on "bank merging and buying out". His point of view basically is that there MAY be a brighter side to this rapidly increasing occurence of merging and buying out in the banking industry here in the Philippines.
As stated earlier in Ms. Mavic's post was that big banks takeover other smaller banks in order to "get ahead" in the industry. In this process however, they also generate more income. And generally, a bigger income for any establishment means that establishment becomes more and more stable. From MY point of view; a stable bank is where I would want to put in my money. So in a way, having a few stable banks rather than having many banks can be better FOR the customers.
Secondly, having a few powerful banks means that these few banks will have the power to expand to various places in the country. So Let's say that I create an account in BIG COMMERCIAL BANK A, here in Manila. In the case that I'm in some remote island in the country, chances are, BIG COMMERCIAL BANK A will be found there since BIG COMMERCIAL BANK A has the capital to expand to this location. Whereas if I deposit at BANK B which just has 1-3 branches in the country due to lack of capital, I wouldn't be able to transact unless I'm in Manila or somewhere near. branching out is just one benefit of having enough money. Generally, more money = more available services.
But my opinion on bank mergers and buyouts isn't entirely good. one reality here, is that because of these mergers and buyouts, a lot of bank employees are left unemployed. This problem although real, in my opinion is not impossible to solve. I think that one solution is to keep the old employees from the merged company and re-train them with the new bank's Standard operating procedures. After all, banks should not only take care of their customers, but also their employees.
Merging with other companies has its bad implications among the employees of the bank which was bought by the bigger bank..One implication is that some employees will lose their jobs and may have a hard time finding new jobs..and the other is that the numbers of non-employed workers will rise which will affect heavily on our economy.. - jude calabio s21
According to Sobeck, 2000 (http://www.nbs.sk/BIATEC/SOBAN.PDF) one of the main reasons for bank mergers is to extend the range of products and services. For example Bank A offers Dollar Accounts and Bank B does not, and then Bank A merges with Bank B, Bank B will also be able to offer Dollar Accounts. Additional services are offered, customers are very satisfied. Also, if Bank B is in the verger of losing in the market, thus endangering the depositors, Bank A would be able to save Bank B and not lose customers.
So contrary to what Bea said, I believe taking care of customers is top priority in the banking business since their loans and deposits make their 'world go round'. I don't think people would trust a bank whose their top priority is not their customers.
Placing 'cut employees' into consideration, they are given compensation, as what was discussed in class last Friday. I think it would be more risky to decline mergers for the sake of keeping the employees because if, for example, Bank B is in the verge of bankruptcy and it declines a merger with Bank A, employees of Bank B might become jobless without getting compensation.
As for customers getting used to the old management, it's only a matter of transition. As the saying goes, "the only constant thing is change".
Ngo, Mary Ann
without really taking ethics or social responsibility into account (ill talk about them in my comment on the next post, the one about the dog-eat-dog thing), i don't really have anything against mergers and buyouts. :) these things happen. and usually, they don't happen by accident. :) someone made a mistake: either the management of the weaker bank wasn't motivating or dedicated enough, or the staff just aren't performing to the best of their abilities. :) or it could be some other reason. :) in any case, by definition, the weaker bank is weaker, and with the highly dynamic (and, admittedly, sometimes ruthless) nature of business competition, companies really have to struggle in order to survive. :) there's not much room for complacency in today's work environment. :)
with regards to the interests of the employees, as a student who is about to enter the workforce and who has begun filing job applications to a number of companies, i think that accepting a company's offer of employment inherently carries with it a commitment and a risk. :) being employed in a company means you decided to put your stake in that company, trusting that the company will protect your interests and seek to secure your maximum prosperity. :) as such, just as the owners and investors are taking a risk and praying that the company prospers, so do its employees. :) the stronger bank, on the other hand, has no direct obligation to the weaker bank's employees, and thus cannot be held accountable for the latter's welfare. :)
similarly, the depositor places his/her trust on the bank. :) he/she gambles his/her money, trusting and praying that he/she made the right choice, i.e., chose the right bank. :) also, a merger/buyout is not always bad for the depositor. :) sometimes, the stronger bank has a more competent workforce and better benefits, thereby ultimately benefiting the clients of the weaker bank, albeit possibly with some initial unfamiliarity. :)
Frederick Kenji See
Section S18
These bank mergers and buyouts are just some of the truths of reality, implying that the stronger wins and the weaker loses. But it can also imply that some of these banks are just using strategy and they want to have more profit by merging with another bank. There are obviously some positive and some negative effects of their actions, but i think they are doing these mergings and buyouts for the good of their customers, some of their employees, and for the higher ups, too. What i mean by "some of their employees" is the position that can be up for grabs resulting to the merge or the buyout. Again, the stronger or the better performer wins the job, and the less performer of the two would lose their job. That is just one of the cruel truth of reality, and we just have to accept it.
Miguel Cabral
ORGMGNT S18
Merging has a lot of different effects on the stakeholders involved. The worst effects are on the employees of the smaller bank, because they are in danger of losing their jobs. Even though the bigger bank will give compensation, this will not be enough to sustain the survival of the employee in the case that he will not be able to acquire a new job.
Jan Momongan
ORGMGNT S18
In my opinion I think that bank mergers and buy outs only seem to look bad at the beginning. Since it happens suddenly, employees have a possibility to loose their job or position and the regular customers will have problems with their current accounts but if they still continue with the weaker banks eventually these problems will still occur because new employees or new customers will prefer to apply in the stronger banks rather than the weaker banks so the weaker banks will just maintain their current employees and customers and instead of the bank improving it will just maintain its current status or go lower. But if there is a merge in the long run it will benefit both the weaker bank and the stronger bank.
Aliento, Juno
ORGMGNT s18
Regarding the implementation of the banking system to another bank(acquired bank), I think its not an immediate process. I do believe that it goes on a leveled processes.
Of course, customer's comfort should be taken in to consider. Acquiring bank wouldn't want old bank's customers to feel uncomfortable by immediately implementing their banking system as that would and could sure cause depositors closing their accounts.
Jeff Esperanza
For me, I would say that the management of both banks should make plans for their employees and clients... Before any merger should take place, the management of both banks should clearly inform all employees & clients about the merger plan, and how it would affect them. For those whose positions maybe redundant, the management should try to tap into the employees other skills, and see if they can be reassigned to another department, where their other skills maybe of good use. Who knows, that person that you transferred maybe the key to your success. Now, for those who really need to be laid off, their notice of termination should be given to them at a longer time interval, so that they would have time to find a new job to transfer, and that their separation pay should be enough to cover them, just until they could find a new job, especially to the senior and loyal ones.
For the clients, they should be also well-informed of the merger plans, what should they expect and what to do with their accounts..
With these, everything would run smoothly throughout the merger, from the planning, transition to the new entity, until to the operation of the new entity
Dino Z. Flores
ORGMGNT S18
As gadgets become of smaller sizes, ironically, bank names develop into contrary. That’s the reason why I won’t be surprised in the future to have BPI MetroLand PCI-Equitable de Oro Bank. I can’t really phantom what to feel whether to be happy because banks have become united (just kidding) because of the fact that they are merging or sad because bank employees are in great danger because they not sure anymore if they will still have their job tomorrow. From these things, it seems there is only one bottom line for us and that is not to work for banks anymore. Just a joke. :)
Merging of banks is something that can be sometimes inevitable. In most cases, can be called case A, the banks who buy wanted to expand their businesses. In some, called case B, the banks to be bought are sometimes in great danger that the only way for it to survive is to be sold for another bank. The ultimate responsibility that banks have to prioritize is that they should keep the wealth of their depositors and it should be done in both cases, A and B. At the same time, they also have to have a considerable plan to those employees that will be affected or maybe will soon be unemployed. I think for case A, the buyer should not let any employee of both its bank and the other bank (that will be bought) be unemployed after. Their only concern is to expand their businesses, so part of it is also expanding its workforce, employees. But for the case B, I don’t think the bank (that will buy the other) have to be responsible for all the employees that will be affected. Having responsible for all the debts of the closing bank is enough but for the welfare of all the employees that will be affected is up to their conscience.
It is true that banks started to merge about a few years back. But it doesn't mean that the stability of employee's jobs are at stake. Given Bank A and Bank B, usually, the same practices are maintained so as not to confuse clients. Also, employees should be more stable since mergine two banks would mean more people to make things work smoothly. I experienced a time when my dad was away from home because Far East Bank is merging with another bank. It takes months to do this which means that the IT people are really working 24/7, making their jobs more stable.
Some banks are bought simply because they cannot function properly anymore. If they continue to stand alone, their employees will lose their job, as compared to merging with another bank who can support them.
It takes time and consideration as to which processes should be maintained and which practices should be changed. The Management does not simply point out which practices and processes stay or go.
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