Nepal Industrial and Commercial (NIC) Bank and Bank of Asia Nepal (BoAN), two commercial banks, for the first time in the Nepali banking history merged into NIC Asia Bank Limited. The bank started its operation from June 30. The union has made NIC Asia, one of the top five banks of the country in terms of capital size and branch network.
The newly merged bank has Rs 2.31 billion as paid-up capital. Before the merger, NIC and BoAN had Rs 1.31 billion and Rs 2 billion paid-up capitals, respectively. Prabin Basnet, Chief Finance Officer at NIC Asia Bank claimed that the bank now has a reserve surplus of Rs 5 billion, one of the highest in the Nepali banking sphere. The bank’s deposit size of Rs 40 billion and credit of Rs 32 billion makes it the fifth largest commercial bank of the country.
Similarly, the bank has a customer base of around 275,000, also one of the highest numbers of customers being served by a Nepali bank. Basnet revealed that the bank plans to double the number within a short time. Likewise, the number of branches to cater to this number of customers is 53, spread over various parts of the country. During the merger, 13 branches of both banks operating in close proximity were consolidated and a new corporate office was set up at the Trade Tower in Thapathali. Basnet said that 13 branches to make up the consolidation will be established in new places within a year, making the bank with a network of 66 branches. He further said that the bank will add 10 new branches within three years. He said that this network expansion would help increase the financial accessibility of people in rural areas.
Basnet said, “Everybody (regulator, employees, customers and peer banks) had their eyes on us as two A-class financial institutions were merging for the first time in Nepal. So, it was challenging for us to make it successful and set an example.” Within a few weeks of joint operations, Basnet felt that it was a successful endeavour.
Chief Finance Officer
NIC Asia Bank
Beating the Challenge
One of the major challenges the bank had to address was streamlining the database of two banks that were operating in two different core banking systems. According to Basnet, NIC was functioning on Pumori software platform while BoAN was operating on Pinnacle software. “It was a herculean task to streamline a huge amount of data of both banks into the Pinnacle platform while maintaining integrity. Similarly, re-training the team to make it comfortable with the new platform was another great task during the merger process,” he said.
According to Basnet, a year passed on while completing the technical tasks of merging. “Both banks were functioning in different environments and working culture but were sound A-class commercial banks. Handling regular tasks along with special works of the merger was exciting, fun and challenging at the same time,” he explained. Basnet said that the hard work of the entire team has paid back. He said that a joint merger integration steering committee was formed under which 16 task forces were created to work out problems and challenges. Similarly, more than 50 staff persons were involved in completing special tasks.
The due diligence process was completed through a competitive bidding. “The request for proposal we prepared was the most comprehensive due diligence request for proposal. This has set a landmark for due diligence,” he said adding that a yearlong homework has helped in meeting the target of merger – creating a synergy effect. He also said that the effects will be visible right from the first quarter of the new financial year.
Marrying the HR
Managing the human resource to keep everybody happy and create a win-win situation for employees of two merging companies is said to be one of the biggest challenges. According to Basnet, this task has been completed swiftly by NIC Asia.
The two banks had almost 650 employees and they were assured that nobody will have to lose their jobs. Rather, the merger brought about new career development avenues and opportunities. “Since the signing of the memorandum of understanding between the two companies for merger, it was clear that employees will not be laid off and the remuneration package they were receiving will not be reduced,” Basnet said, “As the employees had expectations to work for a better and stronger company, they provided moral support during the entire process.” Both the banks soon after the merger decision had started activities to develop bonding between employees with diverse skills working in different work environment and culture.
Customers in Transition
Customers too expected that they would be availed of better services from a new, bigger and better bank, said Basnet. “Customers were confident and never questioned the security of their deposits during the transition. They have even encouraged us with a promise to increase the deposit,” he added and also committed to provide even better products and services, higher than customer expectations, in the days to come.
Changes in account numbers, cheque books and other structural changes due to the merger was well communicated through media, websites, personalised letters, and customer care centres. Similarly, the interest rates on deposits and credits were streamlined few weeks before the merger took place.
Basnet said that rebranding and brand building is a challenging task as both banks had a legacy of their own that cannot be easily forgotten. “Creating an image of strong and capable banking is challenging. We started the rebranding campaign after a long exercise,” he said. The red colour used in the logo of the bank tries to communicate that NIC Asia is attempting to establish itself as an aggressive player in the banking sphere. Basnet said that the new logo also symbolises five principles of the Panchsheel, which are also the internal strategies of the bank.
As a new and rebranded company, NIC Asia plans to move ahead aggressively as a key player in the banking sector. Basnet said that the bank does not need to revamp its products as the range of products and services provided by both the banks were quite innovative ones. However, he hinted that the bank will focus on technology-based products and branchless banking services.