The Affects Of Bank Mergers On Customers & AssociatesEssay Preview: The Affects Of Bank Mergers On Customers & AssociatesReport this essayBank mergers have increased rapidly in the past few years. Many wonder are so many mergers really necessary. The consolidation of two large banks could affect the relationship between the community, customer and the employee. Along with the merging of the two industries comes change for everyone involved. There is a lot of competition in the banking industry, which is the main reason for so many bank mergers. Bank mergers can improve competition and can be beneficial to the community if both financial institutions are in agreement with doing what is best for everyone involved. Banks should consider other options before taking a chance on losing good customers, loyal employees and trust in the community.
The merger between two national banks will affect the community in many ways. Big organizations have a way of changing while they merge. The biggest concern will be relationship management between the two corporations. “You want to be able to call the person there and (have confidence) that they know you, especially if you have to rush something through, like a line of credit” (Wasserman 2). If you dont know the person with whom you are working with, it may take a little longer than expected to get the job done in a timely manner suitable for the customer. You have to gain the trust and respect of your fellow co-workers. Merged banks dont give you the total borrowing capacity that you were use to before the merger. It will be cut back, along with a lot of other valuable services that could cause you to lose some top dollar customers. “Some employees may find themselves with different relationship officers, who arent as familiar with the accounts as the previous officers had been-and who may be stretched a little thinner than in the past. For some, this will be reason enough to find a new bank” (Kidder 1). When customers are comfortable with the employee they have been doing business with for years, they are not so eager to change banks.
Another affect of a bank merger on the community is the closing of local branches. Most banks eliminate costs by closing overlapping retail branches. “Some customers will be forced to bank else where because of the retail branch relocation” (Johnson 3). The low-income communities are hit the hardest by bank mergers. The banking industry will limit its services in the poorer areas of the community. “In order to be effective and respected, the financial institution must represent the community and have the willingness and ability to stand up for the communitys concerns” (Dickerson 1). Financial institutions should invest in and serve the needs of all segments of their communities. Anything that reduces value will affect local communities. “Giant banks could institute higher fees and rates, change credit terms and corporate lending relationships, or choose not to renew a line of credit that isnt deemed profitable enough” (Kidder 2). Bank consolidations could lead to higher interest rates, lower real estate prices and unfinished construction projects. Without cutting costs, there are more dollars to be made which will result in more loans being made to customers in all communities.
The merging of two corporate banks will also affect the employees of each institution. The miscommunication between the bank and the employees leads to misunderstanding and lack of trust in the workplace. Merging banks should consult the employees before making a decision that will affect their future as well as their families. “Bank consolidations usually hurt the employees access to capital” (Johnson 4). They will have to wait until a certain time before they can touch the stock they have in the bank. Some banks eliminate some of the benefits they offered to the employees before the merger took place. The employees no longer get the profit sharing, required number of vacation days, paid time off/sick days, 401k match percentage or company stock that was previously given. Many departments between the two merging banks will consolidate because of the
f>incurrence of uncoordinated management. This will not be a good thing for the employees, as there is no real benefit whatsoever to the employees and all employees are impacted.
We have reviewed all the documents that are included within the merger statement to assess the effect that the merger will have on both. However, many problems with the separation have been identified that have allowed some large shareholders to gain undue control through manipulation. These issues include the use of legal procedures, the use of “special agreements”, the improper handling of pension and employee health benefits, and the improper reporting of the amount and timing of the employee health and pension benefits. An individual’s personal life, financial position, job security, or career goals, such as job search, career choices, or retirement can all be affected by the financial separation. We must take all steps possible to ensure that our employees are happy with the way that their companies plan to utilize the assets and benefits of the combined companies. We think the financial arrangements may not be the best that they could be and we are calling on people with the expertise that the merger will offer and the knowledge that they should know to be aware of the conflicts of interest and to be involved in the implementation of our best policies. We understand shareholders’ concern of how those arrangements affect all employees for which they have already received their retirement benefits and are entitled to the benefits. Also, many of them would benefit from the merger without the benefits given to individual employees. For example, many of us received a combination pension and benefits benefits pension as well as $40/hr savings after moving onto other options. Although we believe the value of these options might continue to grow, we also also believe that they were not as important as they should have been in the original plans that the merger was made. We also appreciate the attention and support of those employees that have been involved in the discussions regarding the merger, and the potential dangers that merger-related problems will carry. We want to focus our financial reporting on the performance of an institution that is within the bounds of both organizations. In particular, we will keep our financial statements from the reports of any of our employees that we have heard about, or are prepared to say that it is a risk facing its business. Although we are the only American banking firm that has financial disclosure reports that are auditable and auditing reports that are subject to shareholder approval, we have not filed reports with the SEC about our financial results in 2014. In any event, all employees of our consolidated corporate office will have the opportunity once again to discuss how to maximize their impact by working with the financial reporting authorities. It is our policy not to make any changes to our financial disclosure reports because the reporting of this situation is required by the U.S. Public Interest Disclosure Act (Public Act 78-382 for the House of Representatives and the Joint Resolution 11-868 for the Senate) and the Internal Revenue Code of 1986 for financial reporting purposes. However, you can read our current annual reports on our behalf that are publicly available by calling 202-225-4090. We will update our financial statements with latest information as we receive it. For a complete list of available information refer to our financial statements for fiscal year 2013 and the 2015 fiscal year Financial Statements. In addition, our company web site is available here.
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