Merger of Emirates Bank International and National Bank of Dubai

Merger of Emirates Bank International and National Bank of Dubai

Introduction

Merger and acquisition is a common approach which plays a substantial part in the corporate sector. A merger is a strategy where two different firms combine their businesses to create a new point to achieve their goals. The main objective of the merger is wealth maximization, profit maximization, cost minimization, and ultimate development and growth of the business (Salim, 2013). In the merger, the original companies terminate their identities and form a new business and also operate with the same identities just to combine their operations. A horizontal merger happens among diverse businesses of similar industry and comparative operations (Krishan & Park, 2002). The merger is not only about the combination of the financial perspectives but it’s about the combination of two different cultures, strategies which carry some inconsistencies. Organizations faced various challenges like cultural differences, employee retention, language barriers, operational issue, etc. (Mitra & Pandey, 2009).

Horizontal Merger

A horizontal merger occurs among the associations working in the comparative business. The merger is ordinarily part of a relationship between two contenders offering similar businesses (“Types of Mergers – Learn about the Different Types of M&A”, 2020).

Background

In 2007 Emirates Bank International and National Bank of Dubai merged their business with more than US$ 55 billion assets and create one of the largest banks in the Middle East. National Bank of Abu Dhabi purposed to facilitate UAE to compete in the global market. The purpose was to make the largest bank of UAE with the help of asset maximization. It was done to confirm that investment for domestic purposes and investment for foreign countries could be ended through a bank which has grate standing in the county (Mitra & Pandey, 2009). There was enormous development in 2007. Yet, toward the finish of 2008 decay hit the financial area, and the bank required to roll out an improvement in their strategies. The merger was finished through a period where the businesses and banks were located jumps of improvement inland through different interests in the nation and all through the world. The new questioned association model was arranged and characterized after the lawful shutting of mixed edges. There were consultants to compose the human digestion of the strategy and the banks did path the greatest number of social workshops for all representatives all through. The mix was finished and apportioned to line administrators and top administration toward the finish of 2009 (Salim, 2013).

Challenges and Strategies

The different culture of both merged organizations always disturbs the employees and organization structure. The equilibrium of companies disturbed due to many factors during the merger so the companies need to adopt various strategies to overcome these challenges (Kanal & Chandani, 2014).  

Person focused change

The person focus changed occurs during the merging process. The employees’ performance improvement and strategies are related to this change as employee’s performance is one of the most important factors for organizational growth. The human resource management department tries to bear with all these problems related to employee recruitment, training, growth, benefits, and remunerations. The human resource department of Emirates Bank International and National Bank of Dubai adopts different strategies and steps to handle all these issues (Kanal & Chandani, 2014).

Recruitment 

Recruitment and selection department selects suitable employees for the business with proper procedures. After the merger of businesses, the selection of new employees was one of the most sensitive matters. Rapid actions need to take about the employees during the merging process. The decision about the employees is a sensitive matter so it was necessary for the bank to resolve this as the earliest stage. Emirates Bank International and National Bank of Dubai did it with the human resource management teams. Both the bank mutually decided that there would be no layoffs and downsizing to guarantee that employees are not exaggerated destructively by the merger (Salim, 2013). 

System Dynamics

Every organization has its own system dynamic and its changes with growth and development. With the growth and development of organization system dynamics change and every department like human resource, IT, and finance demand to change the strategies to run their operation smoothly. Same as the merger of the different organizations also change the system dynamics and required strategies to overcome the challenges (Kanal & Chandani, 2014).

Structure focused change

During merging companies different challenges like downsizing and decentralizing are certain to occur to decrease costs and enhance efficiency and productivity (Mitra & Pandey, 2009).

Profitability issues

It comprises factors like loss of benefits, low yield, and meeting with techniques of transformation and reengineering prompts significant changes in the authoritative arrangement. The achievement and disappointment of the merger rely on how the merging organizations manage difficulties and issues looked during the merger. Emirates Bank International and National Bank of Dubai adopt strategies to overcome challenges and reduce cultural barriers (Kanal & Chandani, 2014).

Employees Training

After the merger of Emirate Bank International and National Bank of Dubai, they arranged 107 culture amalgamation workshops to bring the employees together and new vision, aims, mission, and standards were being shared with them. At the initial stage, the employees did have antagonism though covered to their colleagues (Salim, 2013). During the merger of the bank few employees were not satisfied as they have to leave the organization but most of the employees were happy and satisfied because they were retained by the bank. New policies and strategies were made by organization top management to overcome all challenges. It is rightly said that way of doing things for both the organizations; Emirates International Bank and the National Bank of Dubai are tough after the merger. The strategy articulates that both organizations have strained to get the best new organization (Mitra & Pandey, 2009).

Employees Engagement 

Employee engagement was a significant part of the conversion process. Only the culture workshops were not enough to improve employee involvement. So that they did employee engagement practices within the business (Pandey & Mitra, 2008). On the job training was given to the employees. Different activities were arranged by using different patterns for all employees to bring them together and reduce the cultural barriers. The line managers were integrated into the sequencers where performance objectives and evaluation were completed constantly to confirm employee involvement in all the events of integration. The employees were involved in their regular operations as well as in the assimilation events using continuing performance appraisal seminars, meetings, and plans of actions. After that, an outdoor employee satisfaction and commitment survey was conducted which proved that the merged organization (Emirate Bank International and National Bank of Dubai) had a score that was near to the benchmarked level. Therefore, the merger companies grabbed their human incorporation seriously and confirmed that proactive plans were marked out and executed for the success of the merger (Salim, 2013).

Task Integration and Rebranding 

Human Resources Management and marketing departments functioned along with the integration group in enclosing and associating new HR policies, processes, and advertising policies for the business. Together with these units the finance department, IT and audit teams, and risk executive teams also ensured a very good task in the amalgamation. Throughout the first stage of amalgamation procedures of both banks sustained individually because the banks did not want to disrupt the client operations (Mitra & Pandey, 2009). Somehow both banks had different techniques for dealing with so it was required to integrate both systems. Gradually the stimulation of both processes a new system was formed with the name finnnacle system that all was possible with the cooperation and hard work of the employees. All through this period, another organization structure was again encircled and the organization was guaranteeing that a joining group was giving the best execution to run the day by day activity easily (Salim, 2013).

Stakeholder Management

Employees, clients, investors, and other stakeholders of both organizations were given consideration during the merging process. The incorporation team has significant importance to collaborate with all stakeholders about the changes and development of the merged organization. Smooth communication also necessary as everyone is involved in the modern changes and development of the organization so the integration team makes this possible to deliver relevant information to all departments and stakeholders. After a certain time, the customers of both banks adjust the change of and accept the rebranding organization (Mitra & Pandey, 2009).

Leadership Involvement in change

The top leadership remains involved to grab the changes as the CEO and chairman strained to be present in all the cultural workshops where they interconnected to employees about the latest developments and alterations. The existence of the CEO in the workshop affects the employees in effective manners. The involvement of top management CEO and the chairman was remarked from the strategic incorporation team of the bank (Salim, 2013).

Conclusion

The merger of Emirates International Bank (EIB) and the National Bank of Dubai (NBD) was successful and beneficial. This merger was scheduled between both banks to get the assets maximization, capitalize, and take advantage of resources synergies, and established the largest bank. When the economy was flourishing then it was decided about the merger by both banks as it was the opportunity to establish the largest bank in the UAE. EIB and NBD merger proves that human amalgamation should be quick and then preemptive task integration must be completed for the achievement of the merger. The degree of amalgamation is little in this merger as there were two associations of comparable activities so; there was a particular system amalgamation at the operation level to be completed (Salim, 2013).

References

Kansal, S., & Chandani, A. (2014). Effective management of change during merger and acquisition. Procedia Economics and Finance, 11(3), 208-217.

Krishnan, H. A., & Park, D. (2002). The impact of work force reduction on subsequent performance in major mergers and acquisitions: an exploratory study. Journal of Business Research, 55(4), 285-292.

Mitra, S., & Pandey, D. (2009). Dynamics of the Merger of Emirates Bank International (EBI) and National Bank of Dubai (NBD); Strategic Challenges of Regional Consolidation. Dynamics of the Merger of Emirates Bank International (EBI) and National Bank of Dubai (NBD); Strategic Challenges of Regional Consolidation, 1000-1018..

Pandey, D., & Mitra, S. (2008). Dynamics of the Merger of Emirates Bank International (EBI) and National Bank of Dubai (NBD). Strategic Challenges of Regional Consolidation. Emerging issues and Challenges in Business & Economics, 425.

Salim, B. (2013), Strategic Initiatives During Merger Between Emirates Bank International (EBI) And National Bank Of Dubai (NBD).

Types of mergers – learn about the different types of M&A. (2020). Retrieved 12 june 2020, from https://corporatefinanceinstitute.com/resources/knowledge/deals/types-of-mergers/