THE MERGE OF OMAN BANK AND HSBC
Introduction:
The year 2012 was historical for the Sultanate of Oman, as HSBC bank’s operations in Oman, represented by HSBC Middle East Ltd, and joined forces with Oman International Bank to become a major player in Oman’s evolving banking sector. The merger was completed in June 2012 and the new entity, HSBC Bank Oman SAOG, was born, bringing with it a wealth of knowledge and experience. (Muscat Daily, June 3, 2012, p-2)
Let us analyse what were strategic capabilities of HSBC and OIB which made it viable for the merger and whether the objectives of the merger were achieved. If not, what strategy the merged entity should adopt to derive the intended benefits of the merger.
The objective of this
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Hence it was a win-win proposition for both HSBC and OIB to merge to draw synergies from the strength of both, HSBC’s technology, global reach and product innovation and OIB’s domestic reach and strong customer base.
Under the terms of the merger, HSBC Middle East will inject an additional capital of US$97.4m into HSBC Oman and in turn, OIB issued to HSBC new shares equivalent to 51 per cent of the shareholding in the combined entity.
Though there were synergies and the merger provided gains, there were certain challenges. The organisational culture, customer profile, business segment, banking products and technology in place were totally different. All these require adoption of suitable change management strategy.
The technological challenge of bringing 400,000 retail customers and 10,000 corporate clients of more than 80 branches under one unified banking platform and connecting more than 140 ATMs to the OmanNet National Switch Network were completed by the bank well ahead of its scheduled target. In addition, issue of fresh ATM/Debit cards to ex-OIB customers were achieved in record time.
HSBC Bank Oman also made changes in the business process by making a number of lending policy changes to benefit its customers, rolled out complimentary life insurance on personal loans, launched receivables finance besides providing value added services like on-the-ground
For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
After gaining enough capital to do so, Santander pursued a Merger and Acquisition strategy to largely increase its retail banking scope and scale internationally. It could also be argued that, with the help of their M&A strategy, the company was able to gain competitive advantage by differentiating their IT services. As we will discuss later, Santander acquired a special banking system that would allow the companies to reduce human resources, increase efficiency ratios, and smoothly merge with other businesses due to the integration of the technology.
Technology has become a cornerstone of today’s society so this will also be a huge benefit to the merged companies. Shared technologies from check-in, to baggage tracking, to mobile flight tracking are just a few of the areas that could see improvement by consolidating the resources of both companies. Research and development along with analytics on the companies efficiencies, advancements, and proficiencies within the industry should also increase. Ideas and talent can collaborate on innovations that may at one time seem
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Although the parent company HSBC holdings was established in 1990,when “The HongKong and Shanghai Banking Corporation” Purchased Midland Bank of UK, and its headquarter moved to London from HongKong as a condition in the takeover deal in 1993.
In conclusion, it is quite clear that the only way these two companies would be successful in a merger, would be through common goals. Apparently, the main goal of the two corporations was employee happiness and a sense of peace. The leaders of the corporations were the ones responsible for the sharp and considerate decisions to create the positive outcome.
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Issues investigated in this report will be discussed neutrally and objectively. However, there are still numbers of limitations in this report due to many factors. First of all is the biasness of the information collected from the interview of employees in the company. These information may not be neutral and trustworthy; or even misleading. Also, lacking of time is another limitation of this report. Since this consulting report is conducted within a limited time, the consultant cannot address all issues but major points preventing the merger goes smoothly. In addition, financial issues, which can also be a factor
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It helps the bank to maintain their position in the market as Sultanate Oman leading
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While it is certainly a well-known banking company in the world, HSBC was late to accomplish a clear marketing strategy and making a unified brand. Because he has a number of different branches in the different countries, which created them with different names. Although HSBC made a unified brand in 1998, but the history of bank’s name changes may have reduced brand awareness. For example, a simple online search for the World Bank in different countries fails to shown in the first two pages. Customers may have felt that HSBC was in charge of the local bank and did not realize that HSBC had already served for decades.