Dua Bank Case StudySahil Gupta, director of research at Dua Bank, Tarnaka branch, is worried. His star Senior Financial Analyst, Harleen Kaur, has abruptly announces her resignation. She has accepted an offer from one of Dua Bank’s competitors. Harleen is not only Dua Bank’s Senior Analyst; she is the only one they had. She has worked at the firm as an analyst for over 4 years. This was not a role that could be left vacant for long, and right now, Dua Bank currently is in need of a Senior Financial Analyst with strong coverage & knowledge of the industry, because of an upcoming deal with the Bank.
Sahil examined how much money Harleen had generated for the firm over the years and realized that he could legitimately raise Harleen’s compensation by 25-30%. Currently she was entitled for a compensation of Rs.15 Lacs per annum. However, Harleen has already made her mind to move on.
Dua Bank’s corporate culture is especially strong in its research division. Senior analysts often begin junior analysts and remained at the firm long after they were promoted. Instead of competing with one another, most junior analysts instead support each other. The organization has open door policies and encourages less experienced analysts to consult them if they had questions. Each analyst strives to be ranked as the top analysts of the firm throughout India by the organization’s renowned magazine, but nothing is more prioritized than the quality ouput at the research department. Analysts have to work for long hours, and a lot of that time is dedicated to researching other companies in the financial sector. It is common for Dua Bank’s analysts to develop contradictory views on the workings of the stock market. Quite a few of these analysts are recognized as industry experts.
’A year ago, the financial information office of Bank of America and Barclays Bank was dissolved. Prior to that, the bank was among a number of highly rated banks in India. The bank had developed a more centralized and disciplined practice, as well as the ability to do more aggressive restructuring and remediating the risks of a particular stock. In fact, in the fall of 2011, the bank faced fierce competition from companies like SBI and JP Morgan as well as a number of smaller firms, leading to the merger of all these organizations and setting in motion what later became known as its “Big Ten takeover.”
’In March 2011, the company announced it was restructuring its core business. It plans to sell all existing assets at a high price in a bid to drive down costs, which it called a “recession of momentum.” Dua Bank’s chief executive Vijay Mallya has been quoted as saying, “We will not allow ourselves to be dragged into this kind of market downturn.”
’After several years of consolidation, the Dua Bank’s management has gone through a major restructuring including that of senior analysts. On May 4, 2011, the company will be merged with KKR Financial and will be required to buy stakes from two other firms. The merger is described in more detail in our article on the impact of the merger under the SBI management:
Dua Bank ’s financial model for growth
​
In contrast to others, the Dua Bank’s corporate culture is generally well-read. On the one hand, the management is usually well-versed in the economic issues and understands the importance of investing in the world of finance. On the other hand, it is often easy to avoid these topics and it makes sense to learn the culture of the company and to seek out good executives (though this also has consequences for what is considered too sensitive a area, and thus may not be considered “core banking.” The core bank is, after all, merely a bank that is managed by the core bank of its top executives and that manages its portfolio using the appropriate analytical skills.
’If the company is in financial distress, the most important decisions that can be taken are: How to deal with the financial crisis, when to buy out those investors, what will make that possible, what lessons we can draw from that and what can we learn from that. It is that basic core banking that the company and its analysts have to carry out in order to improve the overall operating picture to the fullest extent possible.
’Although a lot can be learned in economics and business intelligence, many major decisions are still left to mature and many more issues are still on their way to maturity. The key lessons that we have learnt from these years include a strong emphasis on quality of our research, a focus on data, and a culture which encourages more thoughtful and innovative thinking. Our results should not be interpreted in any negative way. The focus on this is not about the stock situation but about how our company is being managed in India. For example, it is not clear why financial services industry analysts chose KKR as a target when they have some of the best experience of the world. But given the company’s close academic reputation and the long history of financial services research, our results should not be misinterpreted as an indictment of our research methodology, or for some other reason or for the market situation in India. However, the key fact that is relevant to the SBI’s decision to consolidate is
Dua Bank’s culture is considered