Manpower Planning in Mergers and Manpower Planning in Mergers and AcquisitionAcquisition

(Merger of Bank of Madura with ICICI Bank)(Merger of Bank of Madura with ICICI Bank)

Presented by – Presented by – 53 Amit Malankar53 Amit Malankar125 Mahesh Sharma125 Mahesh Sharma

Coming together is the beginning. Keeping together is a progress. Working together is a

success ……Henry Ford

Merger & Acquisition Life Cycle

Pre DealDue

DiligenceIntegration Planning

Implement Merger

Evaluate Merger

Role of HR in each Phase Pre Deal Phase Assessing the potential Compatibility. Due Diligence Phase Contract, terms condition ,Government law, Union

relationship. Integration Planning Talent management , New roles, work environment &

location issues. Implementation phase Restructure of organisation , Business strategies ,Process

redesign Evaluating Phase Review Post Merger scenario

Comparison of Bank of Madura and ICICI Bank

Bank of Madura Established in the year 1943 Asset base: over Rs.4,400 crores Capital Adequacy ratio of 14.25 263 banking branches, 132

Computerized branches that account for 90 percent of business.

1.2 million customer accounts Total Employee strength of 2577 of

which 2000 employees were computer literate of whom nearly half were clerks and around 350 were subordinate staff.

ICICI Bank Established in the year 1994 Asset base: over Rs.12, 000 crores Strong capital Adequacy ratio of 19.6

percent. Technology- driven business growth

with 104 branches, 366 ATMs (as on 7

Dec, 2000), the largest ATM Network in India. All branches have been computerized, and Internet Banking facilities have been provided to customers.

Employees: Total strength of around 1500 all of whom are computer literate

Progress of Merger

Decision for Merger

Official Announcement of the merger with Swap ratio

Share holder Approval

RBI Approval

11th Dec 2000

8th Dec 2000

19th Jan 2001

1st March 2001

Comparison of Balance Sheets

Balance Sheet (by 2000) Rs. Million

ICICI Bank Bank of Madura

Liabilities 120,726 44,437 Equity capital 1,968 118 Reserves and Surplus 9,527 2,361 Deposits 98,660 36,310 Borrowings 4,915 1,836 Other liabilities and provisions 5,656 3,812 Assets 120,726 44,437 Cash & Balance with the RBI 7,129 4,561 Balances with banks and call 26,933 3,072 Investments 44,167 17,128 Advances 36,573 16,655 Fixed Assets 2,221 1,788 Other Assets 3,613 1,233

Comparing Income Statements of ICICI Bank & Bank of Madura

ICICI Bank Bank of Madura Interest Income 8,528 3,702 Other Income 1942 987 Total Income 10,470 4,689 Interest Expenses 6,670 2,661 Operating expenses 1,534 1074 Provision for Taxes 1,214 498 Total expenses 9,417 4,233 Profit after taxes 1,053 456

Key FactorsKey FactorsKey Factors Bank Of Madura ICICI Bank

Branch Network 263 branches 106 branches

Total Assets 39.88 billion 120.63 billion

Deposits 97.28 billion 36.31 billion

Return on Assets(ROA) 1.2 lakhs 87000

Business per employee 2.02 crore 5.94 crore

Profit per employee 1.73 lakhs 7.83 lakhs

No. of employees 2600 1800

Swap Ratio Swap Ratio

Bank of Madura ICICI Bank

1 2

Particulars Bank of Madura ICICI Bank

NPA 4% 1.3%

Last dividend paid 55% 15%

Earning per share Rs.44 Rs.7

Book value (as on 30th September 2000)

Rs.206 Rs.62

Market price of share before the merger(7 December at NSE closing price)

Rs.122, 45 152.95

Profit after Tax (financial year 2000) Rs.456 million Rs.1,053 million

New (IN) Vs Old (OUT)New (IN) Vs Old (OUT)

What’s IN What’s OUT

Objective Profitability Development and social

Interests of Shareholders Priority sector

Strategies Pro-active Passive

Segment Target Banking Mass Banking

Business Fee based Fund Based

NPA mgt Recovery mgt. cell Credit monitoring cell

Concentration Investments Advances

HR Policy Hire & Fire Job security

ICICI BANK

Bank of Madura

Synergy of the MergerSynergy of the Merger

Network of over 360 branches.Network of over 360 branches. Reduced time for setting up new branches.Reduced time for setting up new branches. Combined customer base of 2.7 million.Combined customer base of 2.7 million. Combined asset base of Rs.16, 000 crore, which Combined asset base of Rs.16, 000 crore, which

makes the ICICI bank amongst the largest I makes the ICICI bank amongst the largest I private sector banks in India.private sector banks in India.

Continue… Stronger Financial and operational structureStronger Financial and operational structure Increased Geographic ReachIncreased Geographic Reach Huge Customer Base (Can be use for cross Huge Customer Base (Can be use for cross

selling)selling) Tech Edge – ATM, Phone and internet banking Tech Edge – ATM, Phone and internet banking

will save cost and operational expense.will save cost and operational expense. Priority Sector AdvancesPriority Sector Advances Equity Capital & EPSEquity Capital & EPS Large amount of low cost deposit.Large amount of low cost deposit.

Challenges

Managing Human Resources Cultural Integration Creating Knowledge – Oriented Employee

base Managing Client base Managing Rural Branches Positioning both the bank in the context of

new trend

Post Merger Actions Global Consultant –Hewitt Appointed ICICI bank has created 55 Panels to look

after different aspects Golden Handshake – VRS Replacement of VRS employee with

management trainee Integration Process Promotion of BOM employee

Golden Handshake (VRS) Eligibility – 7 Years of service / Minimum

age 40 years as on July 31,2003 3 Month Salary for every completed year

of service or salary to be drawn by for the remaining period of service

Medical Benefits for employee & dependents till normal retirement age.

Part Waiver of Home loans

Conclusion

Establish Clear Communication through proper Channel among the employees.

Training program should have been conducted for the BOM employees

Mixture of ICICI and BOM employee base is require in BOM branches.

Deposit base need to be reduce for BOM client

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