Issue2, Vol. 2 (March -2012)
Merger and Acquisition in Banking Industry: A Case Study of
ICICI Bank Ltd.
Dr. K.A. Goyal* and Vijay Joshi**
*Former Head of Management Department, BIT-WCAS, Muscat, Oman. Faculty, Shri Govind Guru Government College, Banswara. Emailemail@example.com, +91 7597293666
**Doctoral Research Scholar, Department of Business Administration, UCCMS, MLSU, Udaipur. Emailfirstname.lastname@example.org, +91 9460903956
To keep the head high in globalized economy one has to follow t he path of growth, which contains various challenges and issues ; one has to overpower these challenges and issues to become a success story. We consider a case of ICICI Bank Ltd., the largest private sector bank in India, which has acquired nine financial firms to make the steps of the ladder of success. Therefore, the aim of this article is to study the growt h of ICICI Bank Ltd. through mergers, acquisitions, and amalgamation. This article is divided into four parts. The first part includes introduction and conceptual framework of mergers and acquisition. The second part discusses the historical background of ICICI Bank Ltd. and followed by review of literature. The third part discusses all the mergers, acquisitions, and amalgamations in detail. Finally, the article concludes that a firm must devise a strategy in three phases i.e. Pre -merger phase, acquisition phase and post-merger phase. The article will be helpful for policy makers, strategy makers, HR people, bankers, researchers, and scholars. Key Words: Mergers, Acquisitions, Amalgamation, Banks’ Strategy, and Human Resources.
The pressures on the employees of banks around the world have been manifold across financial system deregulation, entry of new players and products with advanced techn ology, globalisation of financial markets, changing demographics of customer behaviour, consumer pressure for wider choice and cheaper service, shareholder wealth demands, shrinking margins. In this scenario, Mergers and acquisitions (M&As) are most widely used strategy by firms to strengthen and maintain their position in the market place. M&As are considered as a relatively fast and efficient way to expand into new markets and incorporate new technologies. Still, we can find many evidences that their success is by no means assured. On the contrary, a majority of M&As fall short of their stated aims and objectives. Some failure can be explained and justified by financial and market factors. On the contrary a considerable number can be traced, which has negl ected those factors, which are related to human resources issues and activities. There are numerous studies, which confirm the need for firms to systematically address a variety of human resource issues, activities, and challenges in their merger and acquisition activities. In the present article, a thought was provoked by a press release (May 20, 2010) that the Bank of Rajasthan’s employees launched an agitation to protest against the then proposed merger with ICICI Bank Ltd. It is a very serious matter a s far as employees and the bank is concerned. It is quite natural phenomena that a dissatisfied employee cannot bring efficiency and effectiveness in rendering services.
2.1 Mergers and Acquisitions: Conceptual Framework
Consolidation of business entities is a world-wide phenomenon. One of the tools for consolidation is mergers and acquisitions. The quest for growth is a major driving force behind mergers and Page 30
International Journal of Research in Management
Issue2, Vol. 2 (March -2012)
acquisitions. The mergers and acquisitions in financial sector of India appear to be driven by the objective of leveraging the...