Mergers and Acquisitions of Commercial Banks
Monday, November 16, 2009
By Mr. Shoaib
One fine morning when our Governor SBP woke up from his sleep, he stated that the banks operating in Pakistan were too much and weak and therefore the Malaysian model needed to be followed where there were less but strong banks.
Consequently he came up with the idea to squeeze the banking strucutre by raising the minimum capital requirements which was later on pursued by his predecessors but later reversed and modified to make it work.As a result of this measure alone, the banking sector in Pakistan saw mergers and acquisitions. Today the banking system of Pakistan has become rock solid and undefeatable by any standards and does not carry any chance of failure due to systemic or any other risk.
With the mergers and acquisitions the quality of service, products and assets quality improved greatly, thanks to this measure. It has also added to the deepening of the capital and financial markets as in the case of Malaysia. As a result of this measure, the banking sector became so strong that it became a danger tro the economy. Consequently certain weak Islamic banks had to be introduced to balance the equation.
As a result of this measure, the banking services which previously were available to less than 18% of the people suddenly became available to all and sundry as in the case of the Malaysian model and today nobody can say that people do not have access to the banking services. As a result of reduction of number of banks, the number of banking staff stood considerably reduced adding to the profitability of the banking sector and the deterioration in the assets quality was made up from this source .
The emerging victorous Presidents of the newly merged entity, preferred not to continue with the exisiting employees and decided to hire the old team from his previous bank. As a result the employees of the newly merged bank who were told that their services would no longer be required as also employees of the bank who expected that they would be hired by the newly merged entity, stopped working and started to look for new opening and business came to a standstill.
Later the surrendered team alongwith the defeated President were declared redundant and were sent home where they are now serving abroad in various insitituions and contributing to their respective economies.
One fine morning when our Governor SBP woke up from his sleep, he stated that the banks operating in Pakistan were too much and weak and therefore the Malaysian model needed to be followed where there were less but strong banks.
Consequently he came up with the idea to squeeze the banking strucutre by raising the minimum capital requirements which was later on pursued by his predecessors but later reversed and modified to make it work.As a result of this measure alone, the banking sector in Pakistan saw mergers and acquisitions. Today the banking system of Pakistan has become rock solid and undefeatable by any standards and does not carry any chance of failure due to systemic or any other risk.
With the mergers and acquisitions the quality of service, products and assets quality improved greatly, thanks to this measure. It has also added to the deepening of the capital and financial markets as in the case of Malaysia. As a result of this measure, the banking sector became so strong that it became a danger tro the economy. Consequently certain weak Islamic banks had to be introduced to balance the equation.
As a result of this measure, the banking services which previously were available to less than 18% of the people suddenly became available to all and sundry as in the case of the Malaysian model and today nobody can say that people do not have access to the banking services. As a result of reduction of number of banks, the number of banking staff stood considerably reduced adding to the profitability of the banking sector and the deterioration in the assets quality was made up from this source .
The emerging victorous Presidents of the newly merged entity, preferred not to continue with the exisiting employees and decided to hire the old team from his previous bank. As a result the employees of the newly merged bank who were told that their services would no longer be required as also employees of the bank who expected that they would be hired by the newly merged entity, stopped working and started to look for new opening and business came to a standstill.
Later the surrendered team alongwith the defeated President were declared redundant and were sent home where they are now serving abroad in various insitituions and contributing to their respective economies.
Labels: Commercial Banks, SBP
posted @ 12:23 PM,
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