Question

In: Operations Management

Case: Barwa Bank has announced the formal completion of its legal merger with Qatar International Bank...

Case:

Barwa Bank has announced the formal completion of its legal merger with Qatar International Bank (IBQ). This merger will lead to the union of two of the most dynamic and dynamic financial institutions in Qatar and the formation of a strong banking entity in compliance with Islamic Sharia law at the local and regional levels, supported by high levels of liquidity and solvency. In light of the first banking merger in the history of Qatar, the joint entity will enjoy a solid financial position with a total assets of more than 80 billion riyals and a strong shareholder base and customers, Barwa Bank will be able to expand the scope of its operational activities and develop its products and services in line with the growing expectations of customers and shareholders alike. .
Consequently, Barwa Bank will provide a variety of products and services that meet the needs of the customers of both banks, while adhering to strict quality control and ensuring that they are always achieved based on the latest banking technologies and innovations. The joint entity will also continue to operate through the network of existing branches of the two banks during the transitional period, where employees will provide clients with services that are in compliance with Islamic Sharia.
Source: Islamic Securities Company

Answer all questions please:
1. What are the desired goals for each of the banks participating in this process? What are the positive and negative aspects of each bank?
2. Explain the factors that must be considered in order to ensure the successful implementation of the merger?
3. What kind of change has occurred in the participating banks?
4. Assuming that you are the CEO of Barwa Bank, Qatar International Bank, what change could be more effective for increasing the market share of the two banks compared to the merger that was implemented?

Solutions

Expert Solution

1. Desired goals for both the banks are -

Barwa Bank ->

The scope of the operational activities of Barwa Bank will expand a lot.

It's products and services will develop in line with the growing customers and geographical area too.

New products and services will also be launched looking at the new market opportunities.

Latest banking technologies will be implemented and innovations will take place.

Qatar International Bank ->

The quality control will improve.

It's reach in the local market and small towns will increase.

Thus it would be providing banking services to the common people of Qatar.

Negative of Barwa Bank - It does not have reach in the international market. Thus the technology and services are also not latest.

Negative of IBQ - It's reach is not good in small towns. Also the quality control is not that good.

2. Following things must be kept in mind during the merger -

A) The services should not hault for a longer period as it would create difficulties for the customers.

B) New services and technologies should be implemented gradually rather than suddenly.

C) No cash issues should be there during the transition period.

3. Barwa Bank will be able to expand the scope of its operational activities and develop its products and services in line with the growing expectations of customers and shareholders alike.

IBQ will improve its hold in the local market and also the quality control.

4. The first thing to be considered is the number of branches present.

The branches with low scope and customer base needs to be shut. This will reduce the expenses and improve the focus on more productive branches.

It needs to be checked how much employees are actually required after the merger. No need to waste revenue in extra employees.

During the transition period there is a need to hire contractual staff as there would be a lot of paper work for the customers.


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