Effects on Mergers and Acquisitions on Bank Growth

EFFECTS OF MERGERS AND ACQUISITIONS ON BUSINESS GROWTH: CASE STUDY OF SOCIETE GENERALE – SOCIAL SECURITY BANK LTD (SG-SSB) CHAPTER ONE 1. 0 INTRODUCTION AND BACKGROUND TO THE STUDY Chief Executive Officers and the Board of Directors of most businesses often think about the growth of their businesses. The reason is that when businesses grow, they yield the best returns other things being equal. Mergers and acquisitions is one of the favored methods used to achieve growth and increase shareholders value.

According to Angwin, (2001) mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly. Although they are used as though they were synonymous, the terms mergers and acquisitions mean slightly different things. A merger happens when two firms, often about the same size, agrees to go forward as a single new company rather than remain separately owned and operated. (Cartwright, S. nd Cooper, C. 1990) . Acquisitions occurs when one company takes over another and clearly established itself as the new owner. SG-SSB is a bank based in Ghana. The name “SG-SSB” stands for Societe Generale Social Security Bank. The bank is based in Accra. According to its website it is the 4th largest bank in Ghana and has 37 branches in Ghana. The bank was first known as Social Security Bank but later rebranded its name to Societe Generale Social Security Bank after Societe Generale; one of the world’s largest banks acquired controlling shares in the bank.

The mission of the bank is to create the preferred banking institution, which employs professionalism, team work and innovation to provide quality products and services that best satisfy the needs of its customers. SG-SSB Ltd has been one of the leading banks in Ghana operating in 37 networked branches across the country serving customers, individuals and small and medium scale enterprises. 1. 1STATEMENT OF THE PROBLEM Mergers and acquisitions may be an ideal way for growth, expansion, ntroduction of new technology, improvement in customer service and new ways of dealing with customers, but things might not always work smoothly after the merger of two firms. The reasons here are numerous; the implications however, are what should be taken seriously into consideration. In the case of Societe Generale Social Security Bank, a lot of factors might come into play. With the merger in place, Societe Generale a totally new bank can put in place certain factors that would rather affect customers and management and this has its effects or implications.

First of all with the creation of this new entity, certain fears and or doubts would be expressed by existing customers. The already existing customers of the bank might not feel secure dealing with a new bank. This can result in them moving to other banks. Also with the creation of a new bank, the modus operandi might change; customers who are already accustomed to these old practices of the bank might be a little confused with the new way in which things are done. With respect to management a new firm merging with the existing firm will mean a clash in for instance organizational and managerial cultures.

Also employees in the bank might not feel safe in the positions they occupy since mergers and acquisitions usually involve certain levels on downsizing. It is against this background that this study seeks to explain the effects of mergers and acquisitions in business practices with respect to Societe Generale Social Security Bank. 1. 2 SIGNIFICANCE OF THE STUDY The finding of the study will attempt to inform management of business entities about the effects and significance of mergers and acquisitions.

It will also attempt to provide management of businesses with an insightful study to the pros and cons of undertaking mergers and acquisitions. It will enable the management of Societe Generale Social Security Bank to assess the impact or effect of the merger on the bank and to make necessary adjustments where necessary. 1. 3OBJECTIVES OF THE STUDY The study aims at achieving the following objectives GENERAL OBJECTIVE: The general objective of the study is to examine the effect of mergers and acquisitions on Societe Generale Social Security Bank. SPECIFIC OBJECTIVES: a)To determine the effects of the merger on Societe Generale Social Security Bank. (b)To compare the performance of the bank currently with the one before the merger with Societe Generale. (c)To assess customer perception of service delivery by Societe Generale Social Security Bank after the merger. (d) To find out the conditions or factors necessary for a successful merger and acquisitions. 1. 4RESEARCH QUESTIONS In the light of the topic under research, the study seeks to find answers to the following questions; (a)What motivated the merge of Societe Generale Social Security Bank? b)Has there been any improvement in services rendered to customers after the merging of the bank? (c)Are mergers and acquisitions really important for business growth in Ghana? (d)What are the effects of mergers on the employees of Societe Generale Social Security Bank? 1. 5 ORGANIZATION OF THE STUDY Chapter one will cover the introduction and background to the study, problem statement, significance of the study, objectives of the study and research questions. Chapter 2 will review the relevant literature on mergers and acquisition.

Chapter 3 will detail the methodology to be employed for the study. Chapter 4 will be the presentation and data analysis of information from respondents. Chapter 5 will be a summary of findings from the study, conclusion and recommendations for further studies. References Albizzatti, N. and Sias, D. 2004. New Tricks for the Old Deal Pro. Mergers and Acquisitions: The Dealmaker’s Journal, 39 (6): 28-35. Angwin, D. 2001. Mergers and Acquisitions across European Borders: National Perspectives on pre acquisition Due Diligence and the Use of Professional Advisers.

Journal of World Business, 36 (1): 32-57. Balmer, J. M. T. and Dinnie, K. 1999. Corporate identity and corporate communications: the antidote to merger madness. Corporate Communications, 4 (4): 182-197. Beitel P, Schiereck D, Wahrenburg M (2004) explaining M& A success in European banks Carey, D. 2000. A CEO roundtable on making mergers succeed. Harvard Business Review, 78 (3): 145-154. Cartwright, S. and Cooper, C. 1990. The Impact of Mergers and Acquisitions on People at Work: Existing Research and Issues, British Journal of Management, 1 (2), 65-78.

Chanmugan, R. , Shill, W. , Mann, D. , Ficery, K. and Pursche, B. 2005. The intelligent clean room: ensuring value capture in mergers and acquisitions, The Journal of Business Strategy, 26 (3):43-49. Coulthard, M. , Howell, A. and Clarke, G. 1996. Business Planning: The key to success. Australia: MacMillan Education. Covin, T. , Kolenko, T. , Sightler, K. and Tudor, K. 1997. Leadership style and post-merger satisfaction. The Journal of Management Development, 16 (1): 22-33. Cullinan, G. nd Holland, T. 2003. Strategic Due Diligence. USA: Bloomberg Press. Datta, D. K. 1991. “Organizational Fit and Acquisition Performance: Effects of Post- Acquisition Integration”, Strategic Management Journal, 12 (4), 281-297. Gadiesh, O. and Ormiston, C. (2002). Six rationales to guide merger success. Strategy and Leadership Hagendorff J, Keasey K (2009) Post- merger strategy and performance; evidence from the US and European banking industries, Kane EJ (2000) Incentives for banking megamergers.