PROJECT CHANGE RISK AND OPPORTUNITIES MANAGEMENT DUE TO THE

MERGER AND ACQUISITION OF NORTHERN AND SOUTHERN BANKS

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ABSTRACT
The definition of a merger is when two firms decide to integrate into one company. The free
market system encourages competition in the industry. As a result, some firms find it
challenging to traverse the unfair competition ground. It is not uncommon for a few of such
firms to be pushed out of the industry. Competition is one of the factors that encourages
companies to pool their resources using mergers. This enables the new company to gain a
competitive edge over others in the industry.

North and South Bank went into such an arrangement. The result was that the North Bank
integrated and in some cases replaced a number of South Bank operations. The business
changes brought into effect by the arrangement included the laying off of some managers,
employees, human resource officials and the dissolution of some network branches and
product portfolios. This merger was both effected by the stakeholders as well as them being
affected by the arrangement. Key stakeholders that experienced this were the employees,
senior management for both North and South Bank and the existing customers. The merger
also caused ripples within the organizational structure of the Banks. This was seen in the
change in management of South Bank as well as the replacement of certain procedures and
policies of the same bank.

INTRODUCTION

Current position of Banks

North Bank
This is a major player in the banking industry of Northern Ireland. It boasts 850(eight
hundred and fifty) employees for all their branches. Approximately one quatre of its workers
have been registered with the Bank Employees Union (BEU). The afformentioned union is a
trade union that champions for the labour rights of employees working in the bank. The
bank’s skill level can be categorized as follows;

Branch Skill level

Headquaters 4 (four)
Other branches 3 (three)
The bank has a bonus program supplementing its industry average salary whereby the
amount earned by each worker is based upon two factors. The first is their performance
while the other is a fixed amount depending on the grade in which the worker performs their
duties.

Employees are also offered certain benefits for instance, loans at comparatively low interest
for all employees and company cars for each employee that exceeds grade 12.

Employee expenses are pensions and the corporate expense card. In addition to federal and
public holidays, employees also enjoy 20 (twenty) vacation days each year. North Bank’s
management style is participative. Here, every employee is given both the permission and
authority to engage in consultation with both their peers and the senior management. The
effect of this has been a highly interactive environment geared towards greater
achievements.

North Banks financial state as per 30th June 2020 was;

category Income Expenses

Interest $ 314 million
Non-interest $ 91 million $ 239 million
Taxes $ 54 million
Shareholder equity $850 million
Stock market value $1.5 billion

Assessing the bank qualitatively leads to a rank of 4 in its operations, 3 in adminstration, 3 in

advertising and marketing, 3 in customer service and 3 in information system facilities.

Strengths of North Bank

 Its operations are reliable

 Its management style is effective
 It possesses skilled employees within its headquarters

Weaknesses of North Bank

 It has a weak grasp of advertising and marketing

 Its branches are deprived of skilled personnel
South Bank
This is one of the top banks in Northern Ireland. It boasts 635 employees under its belt
including all those in its branches and the headquarters. Approximatrly half of them are
registered under the Bank Employees Union.(Schulz-Knappe). The skill level is the same
for both the branches and at the headquarters,4 (four). The bank possesses good human
resource features for its employees. These range from secured pensions, company-paid
expenses, regular benefits and competitive salaries. The salaries at South Bank, being
individually negotiated, exceed those of all other banks in this market.

Furthermore, contracts are negotiated individually. The directors enjoy the same benefits as
in North Bank with regards to a company car. However, unlike North bank, its employees do
not enjoy low interest loans. (Schulz-Knape, Koch & Beckert) The criteria used for pension
contributions is that each employee whose time working for the bank has not yet exceeded 2
(two) years contributes 4% of their annual income. Other benefits enjoyed by employees are
18 vacation days in addition to public holidays.

The management team has 47 employees with the management style being directive. This
means that an authority figure is tasked with coming up with a plan, setting out objectives
and instructing their subordinates on their responsibilties. This style can be effective in
complex projects that involve employees with little experience.

The financial state as of 30th June 2020 can be summarized as follows; (shculz-knappe)

Category Income Expenditure

Net interest $ 231 million
Non interest $ 106 million
Total $ 337 million
Shareholder equity $ 504 million
Stock market value $ 1.1 billlion

Strengths of South Bank

 It has superior advertising and marketing systems in place

 It offers high quality customer service
 It is well located and has good facilities
 Its headquarters are chaired by highly skilled managers
 Its branches also possess highly skilled employees
Weaknesses of South Bank

 Its day to day operations are of comparatively low quality

 Its auditing and accounting procedures are ineffective
 It has an outdated system

MAIN BODY

Stakeholders associated with the acquisition

 Senior executives

The acquisition will mean than only one CEO will remain in the aftermath of the merger. One
of the CEO positions will be made redundant and a new role will be assigned to the
individual. Other executives whose titles and responsibilities will change are the Heads of
Departments.

 Shareholders

The shareholders for both banks will be affected by loss or gains of the stock prices dictated
by the level of investor confidence resulting from the merger. One key stakeholder is the
Sunrise Pension Fund that will be heavily affected should the share prices drop below the
existing ones.

 Regulatory bodies

The regulatory agency is mainly focused on the protection of the interests of customers and
shareholders. Companies use acquisitions as a means to reduce competition. The agency
shall make certain that this does not completely eliminate competition from the industry.

 Customers

One of the main customers, Dott Manufacturing, will be affexted should their customized
products be discontinued. Linking the Information Technology systems of the two banks is
likely to lead to the total replacement of South Bank systems with North Bank systems. This
will discontinue the customized products and they might have to look for new service
providers.
Stakeholder Analysis
This is the analysis of quantitative and qualitative records of stakeholders to make decisions
of the priority of consideration of needs. PMI 2013a

The table below shows the power/influence of both external and internal stakeholders for the
two banks.

North Bank South Bank

Internal Power External Power Internal Power External Power
CEO High Fund High CEO High CEO for High
director People
for pwer
Sunrise
Pension
fund
Head of Medium Banking Medium Head of Medium Service Low
retail Authority retail holders
banking banking
Chief Medium Head of Medium
financial corporate
officer banking
Human High Human High
resources resources
director director
Informatio Medium Employees Low
n Systems
director
Employees Low Managers Low
managers low
The flow chart below identifies the primary stakeholders

CEOs of North and

South Bank

Management Officers for North

and South Bank

Managers
 Employes

The

The flowchart below shows the secondary stakeholders according to 1Hayes 2014

Individuals and groups

affiliated with the bank

Regulatory bodies

Investors

Shareholders
Employes Union

Media

Human rights organizations

Network Analysis

The diagram below shows the connections, formal and informal relations among
stakeholders.

Stakeholder engagement strategy

The shareholders are the first group that will be concerned with the merger. They are
concerned with at least retaining or better yet, increasing the value of their stock after the
merger. 2Bruce P and Shelley 2010. Shareholders approved the merger and this lowered
the resistance to change. To engage with the stakeholders, it is important to clearly state the
essence of continuity as well as the benefits they would get because of change.

The second group to be concerned with the merger with regards to their positions is the
employees. It is important that employees are communicated to very early on and briefed on
the progress regularly. Emails and regularly sheduled should be used throughout the merger
process. This will reduce the anxiety of employees as recognized by 2Huzzard 2018. They
should be assured of their positions and in instances where their roles would change, the
intricacies of the change should be explained clearly.
CONCLUSION

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