CASE STUDY

ON
“ISSUES FACED BY EMPLOYEES DURING MERGER
AND ACQUISTION IN KOTAK MAHINDRA BANK AND
ING VYSYA”
Submitted in partial fulfillment of the requirement of
Master Of Commerce
(2020-2022)

Submitted to:

MEHR CHAND MAHAJAN DAV COLLEGE FOR WOMEN

SECTOR-36 A CHANDIGARH

Supervised by: Submitted by:

Dr. Manpreet Kaur Prerna Mahajan
Course: M.com

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 ACKNOWLEDGEMENT

The purpose of compilation of the subject for a project report always involves
creation of huge debt towards innumerable people whose contribution is
worth mentioning.
I hereby put my sincere thanks to one and all. Also, I am thankful to my
college guide, Dr. Manpreet Kaur for her guidance and invaluable
encouragement. She motivated me and was available whenever the assistance
was needed.
Lastly, I would like to thank “MCM DAV COLLEGE FOR WOMEN” for
giving me an opportunity to work with such esteemed organization.

They have all been a constant guiding force throughout the course of this
project and without their immense support and cooperation this report would
not have been a success.

PRERNA MAHAJAN
M.COM- II SEMESTER
5362

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 DECLARATION

I hereby declare that the project work entitled “ISSUES FACED BY

EMPLOYEES DURING MERGER AND ACQUISTION IN KOTAK MAHINDRA
BANK AND ING VYSYA” submitted to the MCM DAV COLLEGE FOR
WOMEN, is a record of an original work done by me. This project work is
submitted in the partial fulfilment of the requirements for the award of the
degree of M.COM.
I hereby certify that all the endeavor put in the fulfilment of the task are
genuine and original to the best of my knowledge and I have not submitted it
earlier elsewhere.

Prerna Mahajan

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 Content
S.NO PARTICULARS PAGE
NO.
1 Introduction
• Indian banking
• Bank profile 5-18
• Reasons and Benefits of bank merger
• The deal- Kotak Mahindra Bank and
Ing vysya
2 Literature review 19-20

3 Research methodology
• Objectives
• Sampling procedure 21-22
• Source of data
• Limitations of study
4 Data analysis and Interpretation 23-26

5 Findings and conclusion 27

6 Recommendations 28

7 Question & answer 29

8 References 30

9 Annexure 31-32

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 Introduction
Indian Banking
The banking industry is the backbone of any monetized economy. The stage
of development of this industry is a good reflection of the development of the
economy. The banking industry in India is governed by Banking Regulation
Act of India, 1949. Since 1949, this sector has undergone phenomenal reforms
due to the efforts and the vision of the policymakers. The first phase of reform
began with nationalization if the 14 banks in 1969. At this stage, priority
sectors were identified and banking support was given to them. The second
phase was the nationalization of 6 more banks in 1980. However, what can
be considered as a breakthrough in banking services was the entry to private
sector banks which was initiated in 1993. Eight new banks entered the market
at this stage with state of art technology and a brought with them a new wave
of professionalism. It was at this time that India was introduced to the concept
of Debit and Credit cards, e-transfer of funds, ATM ‘s.
Post-liberalization, the banking industry in India has grown at a fast pace.
Increased economic activity coupled with de-regulation has further
strengthened the position of Indian banks. By the end of March 2006, the total
deposits held by the scheduled commercial banks stood at INR 21 lakh crores,
a growth of 15.8 percent over 2005 and a compound annual growth rate
(CAGR) of 14.9 percent since 2001-02. The total loans and advances offered
by commercial banks grew by 36 percent between March 2005 and March
2006 to reach INR 15 lakh crores, recording a CAGR of 23.6 percent since
2001-02. By the end of fiscal year 2005-06, there were 26 public sector banks
(including seven associates of the State Bank of India), 29 private sector banks
(21 old and 8 new private banks) and 30 foreign banks as Scheduled
Commercial Banks (SCBs) in India.
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 MERGER AND ACQUISITON- in Indian Banking
The phrase mergers and acquisitions refers to the aspect of corporate strategy,
corporate finance and management dealing with the buying, selling and
combining of different companies that can aid, finance, or help a growing
company in a given industry grow rapidly without having to create another
business entity.
M&A is a general term that describes the consolidation of companies or assets
through various types of financial transactions, including mergers,
acquisitions, consolidations, tender offers, purchase of assets, and
management acquisitions.
When one company takes over another and establishes itself as the new owner,
the purchase is called an acquisition.
On the other hand, a merger describes two firms, of approximately the same
size, that join forces to move forward as a single new entity, rather than remain
separately owned and operated. Mergers and Acquisitions are not an unknown
phenomenon in Indian Banking.
In fact, the predecessor of State Bank of India, the Imperial Bank of India was
born out of consolidation of three Presidency Banks way back in 1920. In fact,
there were several cases of bank failures, mergers and acquisitions which were
reported in pre-independence period dating back to even early 19th Century.
Proper regulation and control of banks and intervention by the regulator in the
event of a crisis came into being with the passing of Banking Regulation Act
in 1949. However, forced merger and amalgamation as a tool to provide relief
to ailing banks besides protecting public and depositor confidence in banking
system came into being only in 1960 when Section 45 inserted in BR Act.
Panic created by the Nath Bank in the fifties and Laxmi bank and Palai Central
bank in 1960 had prompted this legislative move.
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 BANK PROFILE

KOTAK MAHINDRA BANK

Kotak Mahindra Bank Limited is an Indian banking and financial

services company headquartered in Mumbai, Maharashtra, India. It offers
banking products and financial services for corporate and retail customers in
the areas of personal finance, investment banking, life insurance, and wealth
management. As of February 2021, it is the third largest Indian private sector
bank by market capitalization, with 1600 branches & 2519 ATMs.

Kotak Mahindra Bank is the fourth largest Indian private sector bank by
market capitalization, headquartered in Mumbai, Maharashtra. The Bank’s
registered office (headquarter) is located at 27BKC, Bandra Kurla Complex,
Bandra East, Mumbai, Maharashtra, India. In February 2003, Kotak Mahindra
Finance Ltd, the group's flagship company was given the license to carry on
banking business by the Reserve Bank of India (RBI). Kotak Mahindra
Finance Ltd. is the first company in the Indian banking history to convert to a
bank. As on June 30, 2014, Kotak Mahindra Bank has over 600 branches and
over 1,100 ATMs spread across 354 locations in the country. Kotak Mahindra
group, established in 1985 by Uday Kotak, is one of India’s leading financial
services conglomerates. In February 2003, Kotak Mahindra Finance Ltd.
(KMFL), the Group’s flagship company, received a banking license from the
Reserve Bank of India (RBI). With this, KMFL became the first non-banking
finance company in India to be converted into a bank – Kotak Mahindra Bank
Limited (KMBL).

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ING VYSYA BANK

ING Vysya Bank is a privately owned Indian multinational bank based in

Bangalore, with retail, wholesale, and private banking platforms formed from
the 2002 purchase of an equity stake in Vysya Bank by the Dutch ING Group.
This merger marks the first between an Indian bank and a foreign bank. Prior
to this transaction, Vysya Bank had a seven-year-old strategic alliance with
erstwhile Belgian bank Banque Bruxelles Lambert, which was also acquired
by ING Group in 1998. As of March 2013, ING Vysya is the seventh largest
private sector bank in India with assets totaling 54836 crore (US$8.9 billion)
and operating a panIndia network of over 1,000 outlets, including 527
branches, which service over two million customers. ING Group, the highest-
ranking institutional shareholder, currently holds a 44% equity stake in ING
Vysya Bank, followed by Aberdeen Asset Management, private equity firm
Chrys Capital, Morgan Stanley, and Citigroup, respectively. ING Vysya has
been ranked the "Safest Banker" by the New Indian Express and among "Top
5 Most Trusted Private Sector Banks" by the Economic Times. On 20
November 2014, in an all-stock amalgamation, ING Vysya Bank decided to
merge with Kotak Mahindra Bank, creating the fourth largest private sector
bank in India. On 1 April 2015, the Reserve Bank of India approved the
merger. On 15 May 2016 the whole merger process was completed. In 2002,
Vysya Bank's board of directors and the RBI approved Vysya Bank's formal
merger with the ING Group. Under Indian law, this moves allowed ING to
increase its total equity holdings in Vysya Bank from 20% to 44%. Peter
Alexander Smyth and Jacques PM Kemp were appointed to the board of the
newly formed ING Vysya Bank.

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 List of mergers in Indian Banking

Acquirer Banks Banks to be merged Year

Punjab National Bank Oriental Bank of Commerce 2020

Canara Bank Syndicate Bank 2020

Union Bank of India Andhra Bank 2020
Indian Bank Allahabad Bank 2020
Bank of Baroda Vijaya Bank and Dena Bank 2020

IDFC Capital First 2018

State Bank of India Bhartiya Mahila Bank 2017
State Bank of India State Bank of Travancore 2017
(SBT)

State Bank of India State Bank of Hyderabad 2017

(SBH)

State Bank of India State Bank of Bikaner and 2017

Jaipur (SBBJ)

State Bank of India State Bank of Mysore (SBM) 2017

State Bank of India State Bank of Patiala (SBP) 2017

Kotak Mahindra Bank ING Vyasa Bank 2014
ICICI Bank Bank of Rajasthan Ltd. 2010

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 REASONS FOR BANK MERGER

1) Merger of weak banks: Practice of merger of weak banks with strong

banks was going on in order to provide stability to weak banks but
Narsimhan committee opposed this practice. Mergers can diversify risk
management.
2) Increase market competition: Innovation of new financial products
and consolidation of regional financial system are the reasons for
merger. Markets developed and became more competitive and because
of this market share of all individual firm reduced so mergers and
acquisition started.
3) Economies of scale: Capability of generating economies of scale when
firms are merged.
4) Skill & Talent: Transfer of skill takes place between two organization
takes place which helps them to improve and become more competitive.
5) Technology, New services and Products: Introduction of e- banking
and some financial instruments / Derivatives. Removal of entry barrier
opened the gate for new banks with high technology and old banks can’t
compete with them so they decide to merge.
6) Positive Synergies: When two firms merge their sole motive is to
create a positive effect which is higher than the combined effect of two
individual firms working alone. Two aspects of it are cost synergy and
revenue synergy.

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 BENEFITS OF MERGER AND ACQUISITION

The basic purpose or benefits of merger and acquisitions are following:

1. Synergy- It is the idea that by combining business activities
performance will increase and costs will decrease. It means a business
will attempt to merge with another business that has complementary
strengths and weaknesses.

2. Growth- Mergers can give the acquiring company an opportunity to

grow market share without having to really earn it by doing the work
themselves and expand two companies marketing and distribution
providing them new business opportunities.

3. Eliminate Competition- Many Mergers & Acquisitions deals allow

the purchasing firm to eliminate future competition and gain a larger
market share in its product's market.

4. Diversification of risk- Companies go in for mergers to get the benefits

of diversification. A company acquires another company dealing in
different products and services to reduce the uncertainty of its earnings.

5. Improved Management-For instance, a business with good

management and process systems will be useful to a buyer who wants
to improve their own.

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 Merger of ING Vysya Bank with Kotak Mahindra Bank

To speed up growth there are two routes that is organic and inorganic, the
KMB has chosen the inorganic route that is merger. This merger is the biggest
private sector bank merger in India, the USD 2.5 billion (around Rs.15,475
crore) all stock deal (scheme of merger) between both banks which is based
on merit, fair ratio in the interest of all the stakeholders of the both bank and
the combined Bank. Hence this is a merger which is mutually beneficial. The
separate extraordinary general meeting of KMB and ING Vysya Bank held on
same day that is January 7, 2015 to approve the scheme of Merger between
both the Bank. In case of KMB, the scheme has been approved by 99.30
percent in number representing 99.93 percent in value of the shareholders
present in EGM and in case of ING Vysya Bank 89.04% of the shareholders
present representing 96.89% in value in the EGM approved its merger into
Kotak Mahindra.

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THE DEAL

Kotak Bank Buys ING Vysya in Record $2.4 Billion Share Deal Kotak
Mahindra Bank has agreed to buy ING Vysya in an all-share deal valuing its
smaller rival at $2.4 billion, bulking up as analysts predict the start of long-
awaited consolidation in a crowded banking sector. Dutch lender ING Group
NV owns roughly a 43 per cent stake in ING Vysya. It will be the second-
largest shareholder in Kotak Mahindra after the deal -the largest in the Indian
banking sector to date -with a holding of about 7 per cent. India has 40
publicly traded banks, 24 of them majority owned by the government. The
state banks account for over 70 per cent of a total of $1 trillion advances in
India, leaving dozens of small lenders in their wake with tiny market shares.
Analysts expect the sector to begin coalescing around a few major players
after the country's central bank in April granted licenses to set up two new
banks. Deals, though, have been rare in a banking industry hampered by
restrictive regulation, reluctant investors and strong unions. Thursday’s deal,
subject to regulatory approvals, is the first major bank takeover since top
privately held lender ICICI Bank bought Bank of Rajasthan four years ago.
"Most private sector banks do not really have coverage across India and are
regional players at best," Aman Bhargava, director of financial services

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advisory at Grant Thornton India LLP, said. "Consolidation, especially
amongst the private sector players, is probably the quickest and most efficient
way forward to attain the size and geographical coverage to compete for retail
customers in a growing India." The share exchange ratio indicates a price of
Rs 790 rupees for each ING Vysya share based on the average closing price
of Kotak shares during the month to Wednesday, valuing the deal at $2.4
billion, according to Reuters calculations. That compares to ING Vysya's
closing price of 816.95 rupees on Thursday. The combined banking entity will
have 1,214 branches with a widespread network across the country, the two
banks said in a statement. The merged bank will also leverage ING's network
to tap international business. Kotak Mahindra's bolstered balance sheet and
expanded branch network assuming the deal completes will also put it in a
better position to tap a pickup in demand for credit from Indian corporates and
individuals in the near future, analysts said.

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 POST MERGER EFFECTS

Kotak Mahindra, ING Vysya Bank shares surge on merger report Kotak
Mahindra Bank rises as much as 7.6% to Rs1,160.05, while ING Vysya Bank
climbs 7% to Rs812.85 Shares of Kotak Mahindra Bank Ltd and ING Vysya
Bank Ltd surged in morning trade on Thursday after a news report said Kotak
is in final stages of acquiring ING Vysysa. Kotak Mahindra Bank rose as
much as 7.6% to Rs.1,160.05, while ING Vysya Bank climbed 7% to
Rs.812.85.

However, Kotak Mahindra Bank clarified in a notification to the National

Stock Exchange (NSE) on Thursday that no decision has been made by the
bank in relation to any merger or acquisition transaction. “If the bank takes a
decision to undertake such a transaction, the same being unpublished price-
sensitive information, the bank shall make a disclosure in accordance with
Clause 36 of the listing agreement,” it added.

Acquiring ING Vysya Bank may strategically fill many gaps for Kotak
Mahindra Bank, Reuters said quoting Nomura report. Both banks have low
geographical overlap, similar liability mix and the merger will provide Kotak
with an SME (small and medium enterprises) banking platform, the report
said. Potential acquisition will also help Kotak comply with the Reserve Bank
of India’s (RBI’s) deadline on reducing promoter stake, it added. Earlier, ET
Now business news channel reported that Kotak is close to acquiring ING
Vysya bank and deal is valued at Rs.16,500 crore.

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 The Human aspect of Merger & Acquisition Process

Plenty of attention is paid to the legal, financial, and operational elements of

mergers and acquisitions. But executives who have been through the merger
process now recognize that in today’s economy, the management of the
human side of change is the real key to maximizing the value of a deal.
‘Employers now recognize that human resource issues are the primary
indicator of the success or failure of a deal. When we had mergers just five
years ago, employers had much more leverage than they do now. The full
employment economy has been a huge problem,’ says Laura Carlson, a
Minneapolis corporate finance lawyer at Faegre and Benson.
So, if people issues are so critical, why are they neglected? Possible reasons
include:
❖ Lack of awareness or consensus that people issues are critical
❖ No model or framework that can serve as a tool to systematically
understand and manage the people issues; and therefore
❖ The focus of attention in M & A activity is on other activities such as
finance, accounting, and manufacturing.
This indicates that people issues occur at several phases or stages of M&A
activity. More specifically, people issue in just the integration phase of
mergers and acquisitions include:
(1) retention of key talent;
(2) communications;
(3) retention of key managers; and
(4) integration of corporate cultures.

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 Commonly faced issues by Employees During Mergers and Acquisition
There are multiple issues and questions that may linger in employees mind
during merger period. They could be around:
• Management/Leadership movement and stability: Employees may have
apprehensions if their leadership will move along with them or will the
management stick to the new organization and they will also want to know if
there are any changes to the hierarchy.
• Job Security: One of the biggest fears in the minds of the employees being
acquired is their job security. During the initial phase, there is no clarity on
the organizational structure, roles and profile.
• Compensation & Benefits: Employees may have questions on whether their
salary structure will remain the same. They may also expect sweeteners in lieu
of the new acquisition or brand loss.
• Organizational Culture and Best Practices: There could be uncertainty in
the minds of employees with respect to the new organization’s work culture
and continuity of the best practices like work flexibility, accommodating
employees’ preferences, employee engagement, retention, focus on employee
safety security health etc.
• What’s in it for me? A very common question that gets triggered in
employees’ mind is around his/her benefit out of the entire transformation.
Will the change bring growth and development for employees or will it be
centered around profitability? Will there be opportunities for promotion or
will it lead to role/profile dilution?
• Managing Client reaction: Employees may have apprehensions around
client’s reaction to the organization decision on merger and acquisition, as this
would be as new a change for Client as it is for internal employees.

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 Key challenges HR faces during mergers and acquisition

1. Identifying and communicating the reasons for the M&A to employees.

Often employees see change as dislocating and upsetting. HR must
communicate effectively and openly with all employees throughout the
transition. Specifically, HR must communicate with employees about the
necessity for the change, explain how the change will benefit them, and
manage the stresses that accompany change.
2. Forming an M&A team and choosing and coaching an M&A leader.
The team leader must focus solely on the M&A rather than be involved in
running the business, be sensitive to cultural differences, lead the change
process, and retain and motivate key employees.
3. Deciding who stays and who goes.
HR must determine the new organizational structure, and retain and
motivate key talent. Our workforce planning template can help you better
assess this issue.
4. Assessing cultural differences
When two organizations merge, there could be an issue of cultural conflict.
One company may have a focus on sales, while the other has a focus on
customer service or product innovation. Even the decision-making process
may be different.
5. Working within new business regulations
A key practice for HR is to gain a comprehensive understanding of the new
laws and regulations that are to be found in a new market. Trade legislation,
tariffs and any legal fees associated with mergers and acquisitions are
important functions to navigate.

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 LITERATURE REVIEW

Franz, H. Khan (2007) Merger of two weaker banks or merger of one healthy
Bank with one weak bank can be treated as the faster and less costly way to
improve profitability then spurring internal growth.

Anand Manoj & Singh Jagandeep (2008) studied the impact of merger
announcements of five banks in the Indian Banking Sector these mergers were
the Times Bank merged with the HDFC Bank, the Bank of Madurai with the
ICICI Bank, the ICICI Ltd with the ICICI Bank, the Global Trust Bank
merged with the Oriental Bank of commerce and the Bank of Punjab merged
with the centurion Bank.

Sinha Pankaj & Gupta Sushant (2011) studied a pre and post analysis of
firms and concluded that it had positive effect as their profitability, in most of
the cases deteriorated liquidity. After the period of few years of Merger and
Acquisitions(M&As) it came to the point that companies may have been able
to leverage the synergies arising out of the merger and Acquisition that have
not been able to manage their liquidity. Study showed the comparison of pre
and post analysis of the firms. It also indicated the positive effects on the basis
of some financial parameter like Earnings before Interest and Tax (EBIT),
Return on shareholder funds, Profit margin, Interest Coverage, Current Ratio
and Cost Efficiency etc.

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Goyal K.A. & Joshi Vijay (2011) in their paper, gave an overview on Indian
banking industry and highlighted the changes occurred in the banking sector
after post liberalization and defined the Merger and Acquisitions as per AS-
14. The need of Merger and Acquisition in India has been examined under
this study. It also gave the idea of changes that occurred after M&As in the
banking sector in terms of financial, human resource & legal aspects.

Sinha Pankaj & Gupta Sushant (2011), studied a pre and post analysis of
firms and concluded that it had positive effect as their profitability, in most of
the cases deteriorated liquidity. Study showed the comparison of pre and post
analysis of the firms.

Dr. Smita Meena, Dr. Pushpender Kumar (2014) in their paper “mergers
and acquisitions prospects: Indian banks study” analyzed that even after ten
years of merger, the firms couldn’t improve their performance.

Ishwarya J (2019) in her paper “A Study on Mergers and Acquisition of

Banks and a Case Study on SBI and its Associates” mentioned that the pre
and post- Mergers and Acquisitions of selected banks in India have no greater
changes. But overall, results
indicate that mergers led to higher level of cost efficiencies for the merging
banks.

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 RESEARCH METHODOLOGY

Objectives of the study

• To identify and examine the issues faced by employees during and/or after
merger and acquisition of banks.
• To study the trends of mergers and acquisitions in Indian banking sector.
• To study the performance of banks in the pre and post mergers and
acquisitions.
• To study about the purpose and procedures in merger and acquisition.

Sampling procedure
A sample of 30 respondents (employees of merged bank) was selected for the
study and simple random sampling technique for the collection of data from
the respondents is used.

Source of data
The theory was developed on the basis of secondary data obtained from
secondary sources like books, journals, magazines and internet.
a) Primary Data: Primary data was collected from the respondents with the
help of research tool questionnaire. Survey method was used for collecting
primary data. Online mode was used for collecting primary data.
b) Secondary Data: Secondary data refers to the data collected by someone
else and used by researcher for the problem in hand. The present study made
use of secondary data to have an in-depth understanding of the concept of
digital marketing communication. Secondary literature including journals,
books, internet, newspapers and magazines.

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 Limitations of the study
The following are the limitations of the study:
• The study ignores the impact of possible differences in the accounting
methods adopted by different companies.
• The factors which effect the M & A performance may not be same for all
companies.
• The cost of acquisition for mergers is not considered in the methodology.

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 DATA ANALYSIS AND INTERPRETATION

Q.1: Gender of the respondents

Interpretation: The above information shows that 30%of the respondents

are Female while the remaining 70% were Male.

Q.2: Education qualification

Interpretation: The above information shows that 56% of the respondents

are graduated, 36% are post-graduated and 8% are under other type of
qualification.

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Q.3: Are you aware about merger and acquisition in baking sector?

Interpretation: Above information says that everyone is aware about merger

and acquisition process. There’s not even a single person who is unaware
about the same.

Q.4: Did the employees of merged or acquired bank face any problem?

Interpretation: 90% of the employees said that they face problems while
10% of them are neutral as they do not face any problem while mergers.
Usually, the employees from the bank that's getting merged need to work hard
to keep their positions or earn new ones particularly in the face of
consolidation of multiple processes and roles as well as locations.

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Q.5: Do the employees of merged bank feel any sort of additional pressure on
them?

Interpretation: According to above data, 50% feels additional pressure

whereas 33% feels no pressure at all and rest 17% is neutral about this feeling.
Along with the IT and HR integration, the newly-merged entities will have a lot
to accomplish. Due to the merger, a lot of branches and ATMS will have to be
closed owing to overlaps. This eventually creates an additional pressure on the
existing employees.

Q.6: Is there any difference in working of the bank pre- and post-Merger &
Acquisition?

Interpretation: Above data shows that 97% believes that there’s a difference
between the working of the bank pre- and post-merger and rest 3% do not
believe in this. Many researches shows that the banking industry performance
is significantly better after the merger than before the merger. In the case of
Kotak and ING, the performance of the respective bank only got better.
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Q.7: Do you think Merger and Acquisition is beneficial for Banking sector in
India?

Interpretation: According to 66% of the respondents- merger process is

beneficial for banking sector whereas 17% says it is not beneficial and rest
17% says it may be beneficial. But according to some researches,
Consolidation of banks will consequently form a few strong banks to form a
pillar of the economy.
Q.8: On the basis of performance, what is the overall impact of Merger &
Acquisition on the merged bank?

Interpretation: 33% of the people believe that the bank has improved its
performance post-merger, on the other hand 67% of the says that the bank
needs to improve in all the aspects. There is a significant degree of
risk involved, as mergers and acquisitions transactions overall are estimated
to only have less than a 30% chance of success.

26
 Findings and Conclusion

1) The study ignores the impact of possible differences in the accounting

methods adopted by different companies.
2) The factors which effect the M & A performance may not be same for
all companies.
3) The cost of acquisition for mergers is not considered in the
methodology.
4) HR professionals still need to prove their worth in order to get a more
central role in the M&A process.
The major HR related problems and issues, have been discussed below:
• Different working styles
• Turnover issues
• Favoritism
• Increased stress level
• Behavioral issues with other employees
• Loss of positions and identity
• Frequent job rotation
5) The present study indicates that the pre- and post- Mergers and
Acquisitions of selected banks in India have no greater changes in
profitability ratio; a few banks are satisfactory during the study period.
Thus, the decline in the performance of merging firms cannot be
attributed to merger alone.
6) This merger also improves diverse credit portfolio and cross selling
opportunity in investment banking, broking, life insurance product,
corporate and retail relationship of the merged Kotak Bank.

27
 Recommendations

1. The thrust should be on improving risk management capabilities,

corporate governance and strategic business planning.

2. In the short run, attempt options like outsourcing, strategic alliances,

etc. can be considered. Banks need to take advantage of this fast-
changing environment, where product life cycles are short, time to
market is critical in deciding who wins in future.

3. The Government should not go for M&As as a means of bailing out of

weak banks. The strong banks should not be merged with weak banks,
as it will have adverse effect upon the asset quality of the stronger
banks.

4. An organization should pay more emphasis on post-merger activities of

the employees of that firm. Attention is needed much more on HR level.

5. The strong banks should be merged with strong banks to compete with
foreign banks and to enter in the global financial market.

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 Questions & Answers

Q.1 What is the difference between merger and acquisition?

Ans. A merger occurs when two separate entities combine forces to create a
new, joint organization. Meanwhile, an acquisition refers to the takeover of
one entity by another. Mergers and acquisitions may be completed to expand
a company's reach or gain market share in an attempt to create shareholder
value.
Q.2 What is the reason behind merger and acquisition in Indian banking
sector?
Ans. Merger helps the banks to work more efficiently because it helps in the
increase of the resources and thus the profits. It is done to reduce the
competition and for survival in the market but it is good only when the
economy does not gets affected due to competition issues.
Q.3 What are the main issues faced by employees during Merger and
Acquisition?
Ans. Some of the main issues are:

1. Communication challenges: Communicating with employees,

empowering them and creating a culture for them to thrive are all
fundamental parts to integration.

2. Employee retention challenges: Inherently, many mergers and

acquisitions deals have retention issues, which result from negative
attitudes felt by employees. This can include uncertainty about the
future of the organization's direction, job security and feelings of
confusion due to lack of communication.

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 References:
1. Anand Manoj & Singh Jagandeep (2008), “Impact of Merger Announcements on
Shareholder‘sWealth Evidence from Indian Private Sector Banks”, Vikalpa, Volume 33,
No 1 January - March Retrieved from
2. Goyal K.A., Joshi Vishal (2012) Merger in banking Industry of India: Some Emerging
Issues” Asian Journal of Business and management Sciences. Vol. I No.2. pp. 157-16
3. Goyal K.A. & Joshi Vijay (2012) “Merger and Acquisition in Indian Banking Industry: A
case study of ICICI Bank Ltd.” International Journal of Research in Management, issue 2,
vol. 2, March 2012, pp. 30-4
4. http://cci.gov.in/images/media/ResearchReports/RuchiInterns040711.pdf
5. Http://Papers.Ssrn.Com/Sol3/Papers.Cfm?Abstract_Id=977119&Rec=1&Srcabs=163507
6. http://shodhganga.inflibnet.ac.in/bitstream/10603/12642/7/07_chapter%203.pdf
7. http://shodhganga.inflibnet.ac.in/bitstream/10603/1949/5/05_chapter%202.pdf
8. http://profit.ndtv.com/news/corporates/article-kotak-bank-buys-ing-vysya-in-record-24-
billion-share-deal-700549
9. http://www.livemint.com/Companies/HE7XMLoXfryeBZ0xQZMjjP/Kotak-Mahindra-
Bank-gets-RBI-approval-for-general-insurance.html
10. http://businesstoday.intoday.in/story/kotak-mahindra-bank-buys-ing-vysya-more-
takeovers-in-offing/1/212884.html https://www.peoplematters.in/article/strategic-hr/7-
key-issues-employees-face-during-m-and-a-i-4947

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 ANNEXURE
“A study on mergers and acquisitions in Indian Banking sector”
Part-A

Name __________________

Age:
• 20-30
• 30-40
• 40 and above

Sex:
• Male
• Female
• Others

Education qualification:
• Graduation
• Post-graduation
• Others

Part-B
Q.1 Are you aware about merger and acquisition in baking sector?
• Yes
• No
Q.2 Do you know the motive behind Merger & Acquisition?
• Yes
• No
Q.3 Did the employees of merged or acquired bank face any problem?
• Yes
• No
• Other___________________

Q.4 Do you think there is risk involved in Merger & Acquisition?

• Yes
• No
Q.5 Do the employees of merged bank feel any sort of additional pressure on them?
• Yes
• No
• maybe

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 Q.6 Did the facilities provided to the customers become better after merger?
• Yes
• No
• To some extent
Q.7 Do the customers of merged bank faced any problem after merger?
• Yes
• No
• Other __________________
Q.8 Do you think Merger and Acquisition is beneficial for Banking sector in India?
• Yes
• No
• Maybe
Q.9 Did the merged bank’s senior position employee get affected after M&A process?
• Yes
• No

Q.10 Is there any difference in working of the bank pre and post-Merger & Acquisition?
• Yes
• No
• Maybe
Q.11 Do you think Merger & Acquisition have any impact in the foreign Market?
• Yes
• No
• Maybe
Q.12 What do you think M&A curbing a competition in banking sector?
• Yes
• No
Q.13 Did the merger and acquisition impact on the performance of merged bank?
• Yes
• No
Q.14 On the basis of performance, what is the overall impact of Merger & Acquisition on
the merged bank?
• Improved performance
• Need Improvements
• No Difference found
• others

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