Merger of bank and financial institutions : effect on employee

Abstract

Because more nations are adopting higher levels of deregulation, privatization, globalization, and liberalization, mergers and acquisitions have become more popular as an external growth strategy. In recent years, mergers have been a typical occurrence in Nepal. The Central Bank of Nepal (NRB) adopted a considerable monetary tightening posture in an effort to contain growing inflation as a result of the difficult local and global macroeconomic environments, reduced economic growth, and credit rating downgrades of major economies. The constrained economic situation led to the merger of numerous financial institutions.The necessity to expand the branch network and balance sheet was the primary driver driving these acquisitions.There aren't many studies on the project management and planning aspects of mergers and acquisitions, particularly in the banking industries where employee performance is impacted by disputes caused by disparities in organizational structures and cultures. By conducting a study on the impact of mergers on staff performance in BFIs with a specific focus on development banks of Nepal, this study aims to close the current information gap.The particular goals were to evaluate how compensation strategy, strategic fit, strategic placement, and management structure affected employees' performance while they were employed by Nepalese development banks. With the aid of a survey descriptive research approach, the issue was investigated. Among the 250 respondents who were targeted were those working for development banks with Kathmandu-based headquarters. 150 respondents were chosen as the sample. Each participant in the study completed a questionnaire that was given to the sample population. Quantitative data was gathered, evaluated, and presented using percentages, means, standard deviations, and frequencies using descriptive statistics in SPSS. Karl Pearson Correlation and multiple regression analysis were used to assess the relationships between the variables and draw conclusions. The study comes to the conclusion that employee performance in the merged organization is influenced by compensation strategy, strategic fit, and strategic placement. The management structure was ommitted from the regression analysis because it had no effect on employee performance. The Bank's management should also assess the volume of work and evaluate it in relation to the wages paid to the staff.

In order to improve worker morale and performance through mergers, the bank should expand both official and informal training programs. By fostering an environment that raises employees' motivation levels to satisfactory levels, policies and measures to improve job security for staff members of the amalgamated institutions should be accomplished. The difficulties encountered in putting merger practices into practice as well as potential solutions should be the topic of further research.

Key words: M&A, Compensation strategy, Strategic fit, Strategic placement, Management structure and Employee performance.