Pooja Dhami Final Report.docx

IMPACT OF MERGER ON EMPLOYEE SATISFACTION AND PERFORMANCE OF NIC ASIA BANK

BY POOJA DHAMI Exam Roll No: 15389/15 T.U. Reg. No: 7-2-0364-0034-2015

A Summer Project Report Submitted to Faculty of Management, Tribhuvan University in partial fulfillment of the requirements for the degree of

Bachelor of Business Administration

at the K&K International College Tribhuvan University

New Baneshwor, Kathmandu

1

DECLARATION This is to certify that I have completed the Summer Project entitled “ Impact of Merger on Employee Satisfaction and Performance of NIC ASIA Bank Limited” under the guidance of Sindhu Madhav Dhakal in partial fulfillment of the requirement for the degree of Bachelor of Business Administration at Faculty of Management, Tribhuvan University. This is my original work and I have not submitted it earlier elsewhere.

Date : March, 2019 ……………… Pooja Dhami

2

ACKNOWLEDGEMENTS Firstly and foremost, I thank the god almighty for bringing me to this point in my studies. Secondly, I offer my sincerest gratitude to my supervisor as well as BBA director, Sindhu Madhav Dhakal for his patience and knowledge whilst allowing me the room for research work in my own way.

I would like to thank K&K International College who provided me an opportunity to gain both theoretical and practical knowledge of the research and also help to attain the practical understanding of the subject.

I express my sincere gratitude to the respondent involved in the questionnaire survey who provide me data/information without which the report would be worthless.

I am grateful to my parents for providing me education and also for their continuous support right from beginning of my project to the submission of this report.

Pooja Dhami K&K International College

3

TABLE OF CONTENT Title page DECLARATION ......................................................................................................................... 2 ACKNOWLEDGEMENTS ......................................................................................................... 3 TABLE OF CONTENT ............................................................................................................... 4 LIST OF TABLES....................................................................................................................... 6 LIST OF FIGURES .................................................................................................................... 7 EXECUTIVE SUMMARY........................................................................................................... 8 CHAPTER I................................................................................................................................ 9 INTRODUCTION ...................................................................................................................... 9 1.1 Context Information ......................................................................................................... 9 1.2 Purpose of the Study ...................................................................................................... 10 1.3 Significance of the Study ............................................................................................... 11 1.4 Literature Survey ........................................................................................................... 11 1.4.1 Review of major Articles on job satisfaction and bank performance ..................... 11 1.4.2 Review of major Articles on merger and bank performance .................................. 13 1.5 Research Methods .......................................................................................................... 16 1.5.1 Data analysis tool .................................................................................................... 16 CHAPTER II ............................................................................................................................ 17 DATA PRESENTATION AND ANALYSIS ............................................................................... 17 2.1Respondents’ Profile ....................................................................................................... 17 2.1.1 Gender of the Respondents ..................................................................................... 17 2.1.2 Age of Respondents ................................................................................................ 18 2.2 Data Presentation and Analysis ..................................................................................... 19 2.2.1 Major Influenced areas after merging ..................................................................... 19 2.2.2 Impact of merger on investors ................................................................................ 21 2.2.3 Impact on working environment after merging ...................................................... 22 2.2.4 Impact of merger on productivity ........................................................................... 24 2.2.5 Impact on profitability of the bank ......................................................................... 25 2.2.6 NIC Asia Bank is more successful after merger ..................................................... 26 2.2.7 The services provided by the bank improved after merger ..................................... 27

4

2.2.8 Increases the number of customers after merger..................................................... 29 2.2.9 Merger brings back employee’s confidence on Bank ............................................. 30 2.2.10 Employees career growth and development within the Bank after merger .......... 32 2.2.11 Impact of merger on employees satisfaction ......................................................... 33 2.2.12 Financial highlights of NIC Asia before and after merger .................................... 34 2.3 Findings and Discussion ................................................................................................ 38 CHAPTER III ........................................................................................................................... 41 CONCLUSION AND ACTION IMPLICATIONS ..................................................................... 41 3.1 Conclusion ..................................................................................................................... 41 3.2 Action Implications ........................................................................................................ 42 REFERENCES ......................................................................................................................... 43 APPENDIX .............................................................................................................................. 45

5

LIST OF TABLES Table1. 2 Studies associated with job satisfaction and bank performance .................. 12 Table1. 3 Studies associated with merger and bank performance after 2010 .............. 15

Table2. 1 Gender of Respondents ................................................................................ 17 Table2. 2 Age of respondents ...................................................................................... 18 Table2. 3 Major area influenced after merging ........................................................... 20 Table2. 4 Impact of merger on investors ..................................................................... 21 Table2. 5 Impact on working environment after merging ........................................... 23 Table2. 6 Impact of merger on productivity ................................................................ 24 Table2. 7 Impact on profitability of the bank .............................................................. 25 Table2. 8 NIC Asia Bank is more successful after merger .......................................... 26 Table2. 9 Services provided by bank improved after merger ...................................... 28 Table2. 10 Increases no. of customer after merger ...................................................... 29 Table2. 11 Employee’s confidence on Bank ............................................................... 31 Table2. 12 Career growth and development of employee after merger ...................... 32 Table2. 13 Impact of merger on employee satisfaction ............................................... 33 Table2. 14 Financial indicator before after merger ..................................................... 35

6

LIST OF FIGURES Figure2. 1 Gender of Respondents............................................................................... 18 Figure2. 2 Age of Respondents .................................................................................... 18 Figure2. 3 Major area influenced after the bank merger process ................................ 21 Figure2. 4 Impact of merger in investor ...................................................................... 22 Figure2. 5 Working environment of the bank after merger ......................................... 23 Figure2. 6 The merger impact on the productivity of the bank ................................... 25 Figure2. 7 Merger impact on the profitability of the bank .......................................... 26 Figure2. 8 NIC Asia bank is more successful after merger ......................................... 27 Figure2. 9 The service provided by the bank improved after merger .......................... 29 Figure2. 10 Increases the number of customer after merger ....................................... 30 Figure2. 11 Merger brings back employees confidence on bank ................................ 31 Figure2. 12 Employees career growth and development ............................................. 33 Figure2. 13 Employee Satisfaction after merger ......................................................... 34 Figure2. 14 NPAT of NIC Asia Bank Limited ............................................................ 36 Figure2. 15 Earning per share of NIC Asia bank ......................................................... 37 Figure2. 16 ROE of NIC ASIA Bank Limited ............................................................ 38

7

EXECUTIVE SUMMARY The aim of this research is to analyse impact of merger in NIC Asia Bank Limited in terms of profitability, earning per share, and return on shareholder’s equity, customer’s satisfaction, and employee’s level of satisfactions, employee’s performances, overall bank’s performance, capital structure, bank’s brand value and market position. There are several merger banks and financial company who merge in different period of time. Since there are so many merger banks, the most important thing for banks is to understand customer needs, employees level of satisfaction and shareholder’s profit. To address research aim, questionnaire was distributed to 65 respondents. Indeed, each respondent were required to respond to same sort of questions. Questionnaire were distributed between February 13 and February 15, 2019. 50 Questionnaire were responded and within the responded questionnaire 50 were usable to analysis. Analysis of the research shows that overall bank’s performance is a major influence area after merging the bank, profitability and shareholders has high impacts of merger in NIC Asia Bank Limited, 88% of employees are satisfied with working environment, employees are highly satisfied with productivity, customers agree that service rendered by the bank has been improved after NIC Asia Bank Limited has been merged, NIC Asia is more successful after merging as it has earn more profit and earn the reputation in the market, through the analysis of data there is rapidly increase of profit after merger, there has been fluctuation in ROE, EPS of NIC Asia Bank Limited. The result of this study would contribute as a guideline for the researchers to provide concrete paths for conducting future researches. This study helps the reader to analysis the impact of merger in NIC Asia Bank Limited. The study also assists the concerned authorities of NIC Asia Bank to have idea on merger.

8

CHAPTER I INTRODUCTION

1.1 Context Information The history of merger began long before early 1900s. This period of time covers six main waves of merger for past 100years and these are those of the early 1900’s, 1920’s, 1960’s, 1980’s, 1990’s, and 2000’s. In the past decades, merger activities have increased rapidly and come to light since 2000 when Asian market started following the trend if U.S. and Europe to cope with the downturn of economic and financial markets that began 2000. Emerging countries such as India, china, and some Asian nations entered into merger activity as new major players in global market. Besides, Cross-border merger become an instrument to pursue a business growth in global market (Chand, 2009). Since 2062/063 people movement in Nepal, there has been unnatural growth of banks and financial institutions which lead to an intense competition among them in enticing institution, borrowers and individuals. In order to solve these problems, Nepal Rastra Bank (NRB) has directed the Banking Institutions to go in the merger process.

NIC ASIA Bank was renamed after the merger of NIC Bank and Bank of Asia Nepal on 30th June 2013. Bank of Asia Nepal was a relatively younger bank established in year 2007 and NIC Bank was established in year 1998.The Bank has 196 branches and 5 extension and 198 ATMs across Nepal with a network covering all major financial centres of the country. This was the historic merger in the annals of Nepalese financial landscape as the first of its kind merger between two successful commercial banks in the country. The directors of the bank are great personalities with vast experience in business and the financial sector. The board of director is fully committed to high standard of corporate governance, which among encompasses the principles of transparency, social responsibility. Mr. Tulsi Ram Agrawal is a chairman of NIC ASIA Bank. Mr. Jagadish

Prasad Agrawal, Mr. Ram 9

Chandra Sanghai,

Mr.RajendraAryal,

Mr.TrilokChandAgrawal, Mr.BinodKumarPyakurel and Mr. Ganesh Man Shrestha are the directors of NIC ASIA Bank Ltd. Area served by this bank is around Nepal. “Bank PaniSathiPani” is a slogan of NIC Asia Bank. It is largest private sector commercial bank in terms of capital base, balance sheet size, number of branches, ATM network and customer base.(https://www.nicasiabank.com/about-us/board-ofdirectors)

As a responsible corporate citizen of the country, the Bank has been involved in contributing to the society in various ways as a part of its Corporate Social Responsibility (CSR). In order to promote and focus on CSR activities the Bank has established a charitable foundation called NIC ASIA Foundation. The Bank has committed to pledge 1% of its net profit every year to the NIC ASIA Foundation for promoting various CSR related activities.

In the past, the NIC ASIA Foundation has carried out various activities including, but not limited to, distributing disaster relief packages to the victims of various disasters, contributing to the Prime Minister Relief Fund, organizing health camps, organizing blood donation camps, providing support to old age homes and orphanages, providing scholarships to the needy students, etc. A significant number of people have been benefitted, directly or indirectly, by the activities carried out by the Foundation. The Foundation

plans

to

continue

the

same

in

the

future

as

well.(https://www.nicasiabank.com/about-us/csr)

This study attempts to analyse the satisfaction level of employees and the performance in NIC ASIA Bank Ltd. And also evaluate the perception of employees towards merger. 1.2 Purpose of the Study The main purpose of the study is to analyze the impact of merger on employee satisfaction and performance of NIC ASIA Bank Ltd. The specific objectives of this study are as follows: 

To investigate the perception of employees towards merger and its outcomes.



To evaluate the satisfaction level of employees.



To compare financial status before and after merger. 10

1.3 Significance of the Study The importance of the study means the value of the research and research design to the related organization and person. All the studies are done to have some meaningful outcomes and those outcomes help the readers. The significance of the study are described below: 

The study will play an important role in decision making of the organization.



The major research findings of this study can be used to identify the competitive advantage of NIC ASIA Bank Ltd.



The reference can get knowledge about how to do the project work, what methods and techniques of data collection, presentation and analysis.

1.4 Literature Survey This section includes survey of related literature. Literature review is to justify, rationale of an ensuring research study, provides an overview of historical perspectives and to bring to the light the research trend and problems.

1.4.1 Review of major Articles on job satisfaction and bank performance Employee satisfaction is a critical success factor for organizations because, in the emerging knowledge economies, gaining sustainable competitive advantage for organizations is dependent on the contribution of knowledgeable workers. Zaim et al. (2012). Ahmed and Uddin(2012) attempted to find out the level of job satisfaction of the bankers of Bangladesh. In this study 50 bankers from different areas of NIC ASIA Bank were selected.

Dizgah et al. (2012) investigate the relationship between the job satisfaction and job performance in Guilan public sector. Sample size was 323 and was selected by available non-probable samples. Data were collected by questionnaires and Cronbach’s alpha coefficient was used. Results showed that there is a meaningful relationship between job satisfaction In-role performance and innovative job performance and findings are in accordance with previous researches. Similar study of Hasanzadeh and Gooshki(2013) concluded that here is a significant relationship between involvement management, job satisfaction and job performance. The study

11

also found that job satisfaction partially mediates the relationship between involvement management and job performance. To examine the level of job satisfaction among the employees in the eastern Libiya, Bader et al. (2013) took sample of 536 employee of the major bank from four cities of Libiya and used the Minnesota Satisfaction Questionnaire (MSQ) to assess employees’ job satisfaction. The findings of the study revealed that bank employees in eastern Libya reported a high level of job satisfaction in all aspects of their job. While the factors of gender, age and type of occupation have no significant effects on the level of job satisfaction, marital status, education level, city and the duration of work have shown significant effects on the level of job satisfaction.

A Summary of major literature review on Job Satisfaction and Bank Performance is shown in Table 1.4.1.

Table1. 1Studies associated with job satisfaction and bank performance Study Ahmed

Major findings and

Unddin The major areas of dissatisfaction are salary, promotion

(2012)

and benefits. There should be provision for different kind of rewards for better performance. It will encourage them to take responsibility and also will improve their willingness to perform better.

Dizgah et al. (2012)

The major areas of dissatisfaction are salary, promotion and benefits. Employees in early stages of careers are more satisfied then older employees and they performed also better than those employees. There is a positive relationship between job satisfaction and job performance.

Bader et al. (2013)

Gender, age and type of occupation have no significant effects on the level of job satisfaction, marital status, education level, city and the duration of work have shown significant effects on the level of job satisfaction.

12

1.4.2 Review of major Articles on merger and bank performance The existing analyses of the effects of bank consolidation could be broadly divided into two types, namely, static analyses and dynamic analyses (Berger, Demsetz, and Strahan 1999). The former are usually conducted prior to consolidation events such as mergers and acquisitions (M&As) and aim at detecting potential consequences on performance prior to M&As. The dynamic analyses, on the other hand, study the expost effect of M&As by comparing the performance of the participating institution before and after the event or by comparing it with other non-participating institutions. Owolabi and Ajayi (2013) used gross earnings, profit after tax and net asset of the selected bank as indices to determine financial efficiency by comparing the premergers and acquisitions indices for the period under review for the paper, three Nigeria banks were selected using convenience and judgment sample selection methods. Data were collected from the published annual reports and account of the selected banks and were subsequently analysed applying t-test statistics through statistical package for social science. It was found that the post-mergers and acquisitions period was more financially efficient, the study recommend that the banks should be more aggressive in their profit drive for improved financial position to reap the benefits of post mergers and acquisitions.

To analyse the impact of merger, Naga Sai and Sultana (2013) applied the t-test to various financial ratios for before and after merger data. Based on the analysis of Indian overseas bank data, the study concluded that Net profit margin, Operating profit margin, Return on capital employed, Return on equity and Debt-Equity ratio there is significant difference but no significant difference with respect to Gross profit margin.

Aiming to analyse the effects of banks mergers and their announcements on the prices of stocks, in Europe Dilshad (2013) studied 18 deals that involve banks in Merger and Acquisition from year 2001 to 2010 in order to investigate the returns of shareholder of the targets and acquirers. Evidence supported that significant cumulative abnormal returns were short lived for the acquirers. At the end of the event window, the cumulative abnormal returns were 0. Evidence of excess returns after the merger 13

announcement was also observed along with the leakage of information that resulted in the rise of stock prices few days before the announcement of merger or acquisition. At the same time, the results of cumulative abnormal returns showed that target banks earned abnormal returns on the merger announcement day.

Different researchers have used the Data Envelopment Analysis (DEA) approach to analyse the efficiency of the bank in the post-merger period. Said (2013) analysed the Tunisian bank mergers and acquisitions performance by employing a set of financial and accounting ratio analysis and DEA approach. The empirical findings from financial ratio analysis provided evidence that the mergers have not resulted in generating profits from assets or in return to shareholders post-merger. The findings from the DEA approach suggested that, although an improvement in the overall efficiency scores by 30.77%, Tunisian banks remained, on average, totally inefficient. Our results indicated also that, as a source of improvement, the allocated component (24.76%) was more important than the technical component (5.32%). Thus, as a result of these transactions, Tunisian banks became more able to combine the inputs and outputs in optimal proportions, taking into account the prices, than to avoid the waste in using inputs.

Though merger and acquisition has led to the efficiency and improvement in performance some studies found negative effect of the merger. Kayani et al. (2013) investigated the impact of Merger and Acquisitions on operating performance and shareholder wealth in Pakistani banking sector. Paper studied the impact on acquiring firms before and after the transaction. The study selected 3 transactions of merger and acquisitions in Pakistani banking sector from 2007 to 2010 with both domestic and foreign banks which are operating in Pakistan. Study used event study methodology to determine the post-merger impact on operating performance and shareholders wealth of the bidder firms.

Summary of articles on merger and bank performance is shown in table 1.4.2

14

Table1. 2 Studies associated with merger and bank performance after 2010 Study Owolabi

Major Findings and

(2013)

Ajayi The post-merger and acquisition period are more efficient.

Naga Sai and Sultana Net profit margin, Operating profit margin, Return on (2013)

capital employed, Return on equity and Debt- Equity ratio there is significant difference but no significant difference with respect to Gross profit margin.

Dilshad (2013)

Evidence

of

excess

returns

after

the

merger

announcement was also observed along with the leakage of information that resulted in the rise of stock prices few days before the announcement of merger or acquisition. Said (2013)

Mergers have not resulted in generating profits from assets or in return to shareholders post-merger. Banks lost from their ability to generate revenue from their expenditures.

Kayani et al. (2013)

There is a negative effect of merger and acquisition transaction on the earning per share or shareholder wealth.

From the analysis of data with literature survey, it is found that merger was only concerned with performance aspect of bank. Human aspects in the pre and postmerger were not taken into account. The satisfaction of human aspects was fully neglected in merger process. As human resource play a vital role in performance of bank, this study contributes taking human aspect as the major factor and their positive involvement in the performance of bank.

15

1.5 Research Methods Research methodology is a way to systematically solve the research problem. It refers to the various sequential steps that are to be adopted by a researcher during the course of studying the problem with certain objectives.

The study is based on primary and secondary sources of data. The primary sources of data have been used to assess the opinion of respondents with respect to job satisfaction and bank performance. Secondary data has been used to compare the performance of bank before and after merger.65 questionnaires were distributed to respondents only 50 filled up by the respondents with response rate 76.9%. This report is based on convenience sampling technique. The analysis of study is done within the Kathmandu valley. Questionnaires were distributed to employees of head office of NIC ASIA Bank located at Thapathali, New Baneeshwor, Dillibazar and Sinamangal. 1.5.1 Data analysis tool All the data which are received from the various sources has been manipulated properly, composed together to give a good outcome. They are presented in:  Pie chart  Bar diagram 

Line chart



Percent

16

CHAPTER II DATA PRESENTATION AND ANALYSIS Data analysis is the process of developing answers to questions through the examination and implementation of data. The basic step is the analytical process consist of identifying issues, determining the availability of suitable data, deciding on which methods are appropriate for answering the questions of interest, Applying the method and evaluating, summarizing, and communication the results. This chapter provides systematic presentation and analysis of data to deal with various issues associated with merger, job satisfaction and bank performance of NIC Asia after merger

2.1Respondents’ Profile Different respondent were selected and questionnaire were asked. Following analysis is done. According to questionnaire filled.

2.1.1 Gender of the Respondents This study has covered response of both male and female. Gender is an important variable in expressing and the response about the problem. Majority of the respondents are female (56 percent) and the rest of the respondent are male (44 percent) shown in table 2.1.1.

Table2. 1 Gender of Respondents Particular

No. of respondent

Percent

Male

22

44

Female

28

56

Total

50

100

17

Figure2. 1Gender of Respondents

30

No. of respondent

25

28 22

20 15 10

5 0 Male

Female

Gender

Figure 2.1.1 reveal that out of the total respondent selected as sample for the survey, 44% are male and 56% are female.

2.1.2 Age of Respondents Age of the respondent is one of the most important characteristic in understanding the view about the particular problems. The age gap of the respondents is categorized into three groups i.e. 20-25, 26-30, 31-35 and 36-40, which shown in the table 2.1.2. Table2. 2 Age of respondents Particular

Frequency

Percent

20-25

36

72

26-30

10

20

31-35

3

6

36-40

1

2

Total

50

100

Figure2. 2Age of Respondents 18

40 35

No. of respondedt

30 25 20 15 10 5 0 20-25

26-30

31-35

36-40 Age

Figure 2.1.2 reveals that out of the total respondent selected sample for the survey, 72percent are age group between 20-25, 20percent are age group between 26-30, 6 percent age group between 31-35 and 2 percentages are age group between 36-40.

2.2 Data Presentation and Analysis The analysis of the data is done as per the survey finding. The data is represented graphically in percentage. The percentage of the people opinion were analysed and expressed in the form of charts.

2.2.1 Major Influenced areas after merging When two or more banks merged on each other it automatically impacts and influenced on various area of banks. They are Customers relation, employee performance, investor’s attitude, market position, overall banks performance. To find out the major influenced areas of NIC Asia bank after merging, 50 employees of NIC Asia Bank ltd. were distributed questionnaire and the collected data which are presented below.

19

Table 2.3 Major area influenced after merging S.N.

Options

No. Of respondents

Response (%)

Rank

1.

Customer relations

5

10

III

2.

Employee

4

8

IV

performance 3.

Investors attitude

1

2

V

4.

Market position

10

20

II

5.

Overall

bank’s 30

60

I

performance Total

50

100 Source: Survey, 2019

The above table shows a remarkable impact of merger on overall bank’s performance which is in the first rank. 60% of employees of NIC Asia bank feel that overall bank’s performance is a major influence area after merging the bank. Similarly, 10% of employees feel the customer relations, 20% thinks market position, 2% think investors attitude and 8% employees feel employee performance is the major influence area after merging. This result can also be presented in terms of pie-chart;

20

Figure2. 3 Major area influenced after the bank merger process

10% customer relation

8%

2%

Employee performance Investors attitude market position

20%

60%

overall banks performance

2.2.2 Impact of merger on investors Mergers affect the investors of both companies in different ways and are influenced by several factors, including the prevailing economic environment, size of companies and management of merger process. The paper further asks the question about the impact of merger on investors and the responses are presented in the following table.

Table2. 4 Impact of merger on investors S.N.

Options

No. Of respondents

Response (%)

Rank

1.

Strongly Positive

16

32

II

2.

Positive

21

42

I

3.

Neutral

11

22

III

4.

Negative

2

4

IV

5

Strongly negative

-

-

-

Total

50

100 Source: Survey, 2019

The above table shows that, among 50 respondents, 42% of employees are reacting positive with the statement which in 1st rank. 32% of employees are reacting strongly positive which is in 2nd rank and in 3rd rank 22% are neutral. Only 4% employees are responding negative with the statement. 21

This result can also be presented in terms of pie-chart;

Figure2. 4 Impact of merger in investor 0% 4%

22%

32%

Strongly positive positive neutral negative Strongly negative

42%

2.2.3 Impact on working environment after merging When merger impact on company it can affect the working environment and work. The employees must enjoy the working environment. The paper further asks the question about the working environment of NIC Asia bank ltd. and the responses are presented in the following table

22

Table2. 5 Impact on working environment after merging S.N. Options

No. Of respondents

Response (%)

Rank

1.

Highly satisfied

9

18

III

2.

Satisfied

18

36

I

3.

Neutral

17

34

II

4.

Dissatisfied

4

8

IV

5.

Highly

2

4

V

50

100

Dissatisfied Total

Source: Survey, 2019 Among the 50 number of respondent, the above table shows that 36% of employees are satisfied with working environment so, it is in 1st rank and 18% employees are highly satisfied on working environment of NIC Asia bank ltd after merging so, it is in 2nd rank. 34% employees are neutral, 8% employees are dissatisfied and 4% employees are highly dissatisfied,it means merger has not perfectly positive impact in this bank. This result can also be presented in terms of pie-chart;

Figure2. 5Working environment of the bank after merger

8%

4% 18% Highy satisfied Satisfied Neutral

34%

Dissatisfied 36%

23

Highy dissatisfied

2.2.4 Impact of merger on productivity The study seeks to determine the impact of merger on productivity of NIC Asia bank ltd. After the merger the trend of almost banks shows that, improved on productivity like increase on number of branches, ATM facilities, loan facility at low interest rate etc. To identify the nature of impact on NIC Asia Bank, questionnaire was distributed to the 21 number of employees of this bank. The responses are presented in the following table.

Table2. 6 Impact of merger on productivity S.N.

Options

No. Of respondents Response (%)

Rank

1.

Highly agree

17

34%

II

2.

Agree

26

52%

I

3.

Neutral

4

8%

III

4.

Disagree

1

2%

V

5.

Highly disagree

2

4%

IV

Total

50

100 Source: Survey, 2019

The above table shows that, among 50 respondents, 52% are agree with the statement which in 1st rank. 34% employees are highly agree which is in 2nd rank and in 3rd rank 8% are neutral. 2% are disagree with the statement and 4% is highly disagree because they are not getting proper reward. This result can also be presented in terms of pie-chart;

24

Figure2. 6The merger impact on the productivity of the bank 2% 4% 8% Strongly agree

34%

Agree Neutral Disagree Highly disagree 52%

2.2.5 Impact on profitability of the bank To find out either the merger impact on profitability or not, survey was conducted in NIC Asia bank ltd. 50 employees of different levels were distributed questionnaire and the collected data is presented below.

Table2. 7 Impact on profitability of the bank S.N.

Options

No.

Of Response

respondents

(%)

Rank

1.

Highly agree

20

40%

II

2.

Agree

26

52%

I

3.

Neutral

2

4%

III

4.

Disagree

1

2%

IV

5.

Highly disagree

1

2%

IV

Total

50

100 Source: Survey, 2019

The above table shows that, among 50 respondents, 52% of employees are agreeing with the statement which in 1st rank. 40% of employees are highly agree which is in 2nd rank and in 3rd rank 4% are neutral. 2% employees are disagreeing with the statement and 2% is highly disagreeing on profitability of the bank after merger. 25

This result can also be presented in terms of pie-chart;

Figure2. 7 Merger impact on the profitability of the bank 2%

2%

4% Highly agree 40%

Agree Neutral Disagree Highly disagree

52%

2.2.6 NIC Asia Bank is more successful after merger

To find out either the bank is successful after merging or not, survey was conducted in NIC Asia bank ltd. 50 employees of different levels were distributed questionnaire and the collected data is presented below.

Table2. 8 NIC Asia Bank is more successful after merger S.N

Options

No. of respondents

Response (%)

Rank

1.

Strongly agree

17

34

II

2.

Agree

27

54

I

3.

Neutral

4

8

III

4.

Disagree

1

2

IV

5.

Strongly disagree

1

2

IV

Total

50

100 Source: Survey, 2019

26

The above table shows that 57% employee in 1st rank agrees that NIC Asia bank is more successful after merging as it has earn more profit and earn the reputation in the market.. 43% respondents in 2st rank strongly agree, and no one is disagreeing with the success of the bank after merger. This result can also be presented in terms of pie-chart;

Figure2. 8NIC Asia bank is more successful after merger 2% 2% 8% 34%

Strongly agree Agree Neutral Disagree Strongly disagree

54%

2.2.7 The services provided by the bank improved after merger The main objective of the bank is to provide proper services to both internal and external stakeholders of the banks. Services should be improved so the positive result can obtain.

27

Table2. 9 Services provided by bank improved after merger S.N

Options

No. of respondents

Response (%)

Rank

1.

Strongly agree

14

28

II

2.

Agree

22

44

I

3.

Neutral

10

20

III

4.

Disagree

3

6

IV

5.

Strongly disagree

1

2

V

Total

50

100 Source: Survey, 2019

The above table shows that 44% employee agrees that service rendered by the bank has been improved after NIC Asia bank limited been merged. So it is in 1st rank. 28% strongly agree, 20% are neutral, 6% are Disagree and only 2% are highly disagreeing with the service rendered by bank. Some are disagree or strongly disagree because the service provided by the bank is not meeting all the demand of costumer and employees. This result can also be presented in terms of pie-chart;

28

Figure2. 9 The service provided by the bank improved after merger 2% 6% Strongly agree

28% 20%

Agree Neutral Disagree Strongly disagree 44%

2.2.8 Increases the number of customers after merger The effect of mergers on customers can be positive and negative, depending on industry and market competition. To find out either the no. of customers increases after merging or not, survey was conducted in NIC Asia bank ltd. 50 employees of different levels were distributed questionnaire and the collected data is presented below.

Table2. 10 Increases no. of customer after merger S.N

Options

No. of respondents

Response (%)

Rank

1.

Strongly agree

25

50

I

2.

Agree

18

36

II

3.

Neutral

6

12

III

4.

Disagree

-

-

-

5.

Strongly

1

2

IV

50

100

disagree Total

Source: Survey, 2019 The above table shows that, among 50 respondents, 50% of employees are strongly agreeing with the statement which in 1st rank. 36% of employees are highly agree 29

which is in 2nd rank and in 3rd rank 12% are neutral. Only 2% employees are highly disagreeing on the statement of increasing number of customer after merger. This result can also be presented in terms of pie-chart;

Figure2. 10Increases the number of customer after merger 0% 2% 12% Strongly agree Agree 50%

Neutral Disagree

36%

Strongly disagree

2.2.9 Merger brings back employee’s confidence on Bank Customer’s confidence and satisfaction determine the success of the organization. Following table shows the opinion of the employees of NIC ASIA about the customer’s confidence after merging the bank.

30

Table2. 11 Employee’s confidence on Bank S.N Options

No. of respondents

Response (%)

Rank

1.

Strongly agree

13

26

III

2.

Agree

17

34

I

3.

Neutral

16

32

II

4.

Disagree

3

6

IV

5.

Strongly disagree

1

2

V

Total

50

100 Source: Survey, 2019

The above table shows that out of 50 respondents 34% which are in 1st rank are agrees, 32% in 2nd rank neutral, 26% strongly agree, 6%disagree and 2% strongly disagree that the bank has reinstate the employee’s confidence on NIC Asia bank ltd This result can also be presented in terms of pie-chart;

Figure2. 11Merger brings back employees confidence on bank 2% 6% 26% Strongly agree Agree 32%

Neutral Disagree Strongly disagree

34%

31

2.2.10 Employees career growth and development within the Bank after merger If employees are getting bored and restless, it might have less to do with promotion opportunities, and more about their development. To find out the individual career growth and development within the bank after merger, survey was conducted in NIC Asia bank ltd. 50 employees of different levels were distributed questionnaire and the collected data is presented below.

Table2. 12 Career growth and development of employee after merger S.N

Options

No. of respondents

Response (%)

Rank

1.

Strongly agree

11

22

II

2.

Agree

25

50

I

3.

Neutral

7

14

III

4.

Disagree

6

12

IV

5.

Strongly disagree

1

2

V

Total

50

100 Source: Survey, 2019

The above table shows that, among 50 respondents, 50% of employees are agreeing with the statement which in 1st rank. 22% of employees are highly agree which is in 2nd rank and in 3rd rank 14% are neutral. 12% employees are disagreeing with the statement and 2% is highly disagreeing with the statement of employee career growth and development. This result can also be presented in terms of pie-chart;

32

Figure2. 12Employees career growth and development 2% 12%

22% Strongly agree Agree

14%

Neutral Disagree Strongly disagree

50%

2.2.11 Impact of merger on employees satisfaction Employee satisfaction is also called job satisfaction. Employee satisfaction is typically measured using an employee satisfaction survey.

Table2. 13 Impact of merger on employee satisfaction S.N.

Options

No. Of respondents

Response (%)

Rank

1.

Strongly satisfied

9

18

III

2.

Satisfied

27

54

I

3.

Neutral

13

26

II

4.

Dissatisfied

-

-

-

5.

Strongly dissatisfied

1

2

IV

Total

50

100 Source: Survey, 2019

The above table shows that, among 50 respondents, 54% of employees are satisfied with the statement which in 1st rank. 26% of employees are neutral which is in 2nd

33

rank and in 3rd rank 18% are strongly satisfied. Only 2% employees are strongly disagreeing with the statement of employee satisfaction. This result can also be presented in terms of pie-chart; Figure2. 13Employee Satisfaction after merger

0% 2% 18% 26%

Strongly satisfied Satisfied Neutral Dissatified Strongly dissatisfied

54%

2.2.12 Financial highlights of NIC Asia before and after merger To identify the impact of merger on shareholder’s, this research work compare and analyse the extensive pre and post-merger banking performance of NIC Asia bank ltd. at different period of time by using financial and accounting indicators. Net Profit/Loss, EPS, ROE are the important financial indicators as it measures the rate of return on Shareholder’s investment. Following table shows the calculation and impacts of merger in profitability and shareholders.

34

Table2. 14 Financial indicator before after merger Before Merger

After merger

FY

2011/

2012/

2013/

2014/

2015/

2016/

2017/

Particular

12

13

14

15

16

17

18

495,7

391,7

642,1

831,8

680,3

1,066,

1,634,

03,67

79,28

36,40

88,87

17,10

906,2

460,0

6

1

6

2

1

32

00

37.80

30.06

47.41

35.98

25.59

23.38

28.53

24.80

16.48

13.17

15.92

13.05

16.50

18

s

NPAT

EPS ROE Source: Annual Report of NIC ASIA Bank Limited

Net Profit Net Profit/Loss is the total earnings or deficit of the concern company. It is calculated by subtracting all the expenses with its total revenue published by the company as an income statement. It measures the financial performance of the company. Through the analysis of above data, there is rapidly increase in net profit after merger up to FY2014/15 and decrease in FY 2015/16 and again increase in FY 2016/17 and it continue to increase again in 2017/18. The above data are also presented in following figure.

35

Figure2. 14NPAT of NIC Asia Bank Limited

NPAT

1,800,000,000.00 1,600,000,000.00 1,400,000,000.00 1,200,000,000.00 1,000,000,000.00 800,000,000.00 600,000,000.00 400,000,000.00 200,000,000.00 -

Fiscal year Through the analysis of data there is rapidly increase of profit after merger. It shows significant relation between merger and profitability in NIC ASIA Bank Limited. When increases the profit it helps to strengthens the bank and makes more success. Profit in 2012/13 is less than 2011/12, profit in 2013/14 is more than 2012/13, profit in 2014/15 is more than 2013/14, profit in 2015/2016 is less than previous year but in year 2016/17 it has high profit than 2015/2016 and in year 2017/18 it has highest net profit after tax that is Rs 1,634,460,000.

Earnings per Share EPS measures the profit earned to the equity stakeholders on per share basis. It is calculated by dividing the net profit by number of outstanding shares. It gives an overall figure of net earnings belong to the ordinary shareholder’s on per share basis. It shows the trend of earning of shareholders. The trend can be shown in the following figure.

EPS = Net profit available to equity share holders (NPAT) Number of ordinary share outstanding (N)

36

Figure2. 15Earning per share of NIC Asia bank 50 45 40 35 30 25

20 15 10 5 0 2011/12

2012/13

2013/14

2014/15

2015/16

2016/17

2017/18

The figure EPS of NIC ASIA Bank Limited has been rapidly decreasing from fiscal year 2011/12 to 2012/13 that is from 37.80% to 30.06%, and then increases in fiscal year 2013/14, and rapidly decreases in fiscal year 2014/15, 2015/16 and 2016/17. And now it is slightly increasing in year 2017/18.

Return on Equity ROE measures the rate of profit generated by utilizing the shareholder’s funds. Return on equity measures the impact on shareholders and find out the condition of shareholders. It is calculated by dividing the profit after tax by average shareholder’s equity. The ratio show how effectively the shareholder’s investment has been utilized by the firm.

𝑅𝑂𝐸 =

Net profit after tax × 100 Average total shareholder’s equity

The trend can be shown in the following figure.

37

Figure2. 16 ROE of NIC ASIA Bank Limited

30 25

ROE

20 15 10 5

0 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Fiscal year

There has been fluctuation in ROE of NIC ASIA Bank 2016. From fiscal year 2011/12 to 2013/14 it has decreases then slightly increases in fiscal year 2014/15 and then decreases in year 2015/16 and again increase in

fiscal year 2016/17and

2017/2018.

2.3 Findings and Discussion The above study shows that there is a great fluctuation in banking sector of Nepal. After the democracy in 2047 B.S. the numbers of banks were increases in Nepal. It creates unfair competition in banking market of Nepal. After the implementation of merger by law 2011, there is now substantial development of banking markets and increasing its strengths. The following major themes are found out from the above study. 

Among the 50 respondents, the majority of the respondents were Female (56 percent) and remaining (44 percent) were male respondents.



Out of the total 50 respondents the maximum numbers of respondents falls under age group of 20-25 (i.e.72 percent). 38



Majority of the respondents (60 percent) answered that overall bank performance is influenced after merger. However, (20 percent) of respondents answered that market position is influenced after merger, (10 percent) thinks customer relation is affected.8% thinks that employee performance is affected and 2% think that investors’ attitude is affected.



Majority of the respondents (42percent) finds the impact of merger positive, (32 percent) finds strongly positive, (22percent) finds neutral and 4 percent finds negative.



Among the 50 number of respondent, majority of employees (36 percent) are satisfied with working environment, (18 percent) highly satisfied on working environment of NIC Asia bank ltd after merging. (34 percent) neutral, (8 percent) dissatisfied and (4 percent) highly dissatisfied, it means merger has not perfectly positive impact in this bank.



Among 50 respondents, majority of respondents (52 percent) agree that the productivity of bank increases after merger. 34% employees are highly agree, 8percent are neutral. 2 percent are disagree with the statement and 4% is highly disagree



Majority of the respondents (52 percent) agree on profitability of bank after merger, (34 percent) highly agree. (8 percent) neutral, (4 percent) highly disagree and (2 percent) disagree.



Majority of respondents (54percent) agree with the statement that NIC ASIA Bank is more successful after merger, (34 percent) of the respondents strongly agree on it whereas 8 percent of the respondents are neutral. (2 percent) disagree and (2 percent) highly disagree with the statement.



Majority of the respondents (44 percent) agrees that services provided by bank has been improved after merger, (28 percent) strongly agree,(20 percent) of the respondents are neutral on it whereas (6 percent) of the respondents disagree. (2 percent ) strongly disagree.



Out of 50 respondents, (50 percent) strongly agree with the statement that the number of customers increases after merger. (36 percent) highly agree and in ( 12 percent) neutral whereas (2 percent) highly disagree with the statement.



out of 50 respondents (34 percent) agree with the statement that merger brings back employees’ confidence on bank, (32 percent) neutral, (26 percent) 39

strongly agree, (6 percent) disagree and (2 percent) strongly disagree with the statement. 

Majority of respondents (50 percent) agree with the statement that there is employee career growth and development within the company after merger. (22 percent) highly agree, (14percent) neutral, (12 percent) disagree and (2 percent) highly disagree with the statement of employee career growth and development.



Majority of respondents (54percent) satisfied with the statement. (26 percent) neutral, (18percent) strongly satisfied. (2 percent) strongly disagree with the statement of employee satisfaction



Banking performance in post-merger period is better than pre-merger period

A similar study conducted by Ahmed and Unddin, (2012) and Dizgah et al., (2012) found thatthe major areas of dissatisfaction of employees are salary, promotion and benefits and he conclude that there is positive relationship between employee satisfaction and performance. This research also found that satisfied working environment, individual career growth and development within the bank can increase the satisfaction level of employees and performance of bank. Owolabi and Ajayi, (2013) found that post-merger and acquisition period are more efficient. This research also found that after merger productivity and profitability increases. The study conducted by said,(2013) concludes that mergers have not resulted in generating profits from assets or in return to shareholders. Banks lost from their ability to generate revenue from their expenditures. But in this research only performance comparison is done between before and after merger. The study conducted by Kayani et al., (2013) concludes that there is a negative effect of merger and acquisition on the earning per share or shareholder wealth. And this study also concludes there is negative relation effect of merger on the earning per share.

40

CHAPTER III CONCLUSION AND ACTION IMPLICATIONS

3.1 Conclusion The major conclusion of this study is employees of the bank are not fully satisfied. Employees also perceive risk in their job. When two or more bank merges, bank becomes more strong and competitive. Maximum numbers of employees are satisfied with working condition and services provided by bank. According to the perception of employees overall banks performance in influenced after merger, impact of merger on investor is more positive, productivity and profitability of bank increases after merger. Employees also believe that merger can solve current financial problems of liquidity, less confidence, and many other problems.

This study also concludes that the success of merger depends upon the satisfaction of employees. Merger can succeed by attracting more customers for quality and better services. When banks merge, employees expects that their salary and benefits would increases more growth opportunities as well as training and development opportunities would arise. Employees believe that merger can help improvement in working condition, services provided by bank, training and development that help to maintain better relation with co-workers and supervisors, so that employees’ performance would be better.

The secondary data collected by bank showed that Net profit after tax of bank can be increased after merger. Merger helps in great deal to increases the bank performance. ROE and EPS are also increased after the merger of NIC ASIA Bank. This shows that merger in one way or other helps to improve the performance of bank.

41

3.2 Action Implications This part of the report includes the action implications of this study along with the same valuable suggestions that might come helpful for any other similar research conducted in the future. These implication and recommendations are solely based on the conclusions drawn on above section. 

Government should provide enabling environment that will encourage more merger in Nepal, where our nation can have a strong bank with good capital bases



As the result revealed that employees are less satisfied with performance appraisal and training and development opportunities, bankers should make more effective performance appraisal system and provide deserving salary which can increase satisfaction level in employees and help increase in bank performance.



As the result has revealed that workload for employees increases after bank go into merger, which is causing dissatisfaction in among employees, the managers of merger banks should make flexible and relax rules in working hours, procedures and methods.



After the merger of bank there may occurs lack of communication and that creates distrust and uncertainties in the work place, leading to lower employee engagement levels so, employee participation is important.

42

REFERENCES Ahmed, S. and Uddin, M.N. (2012), Job satisfaction of banks and its impact in banking: a case study of Janata Bank, ASA University Review. 6(2), 94-102.

Bader, et al. (2013), Job satisfaction among bank employees in eastern Libya, American International Journal of Social Science, 2(1), 30-44.

Berger, A., Strahan, Ph., Demsetz, R.(1999),The consolidation of the financial services industry: causes, consequences and implications for the future.Journal of Banking & Finance. 23(2), 135-194.

Chand, G. (2009),Merger and Acquisitions: Issues and Perspectives from the Asia-Pacific Region,Asian Productivity Organization. 5(4), 62-83.

Dilshad, M.N. (2013),Profitability analysis of mergers and acquisitions: An event study approach, Business and Economic Research, 3(1), 89-120.

Dizgah, M.R, Chegini, M.G. and Bisokhan, R. (2012), Relationship between job satisfaction and employee job performance in Guilanpublicsector, Journal of Basic and Applied Scientific Research, 2(2), 1735-1741.

Hasanzadeh, M. &Gooshki, S.S (2013), Job satisfaction as a mediator in relationship between involvement management and job performance among bank employees in Kerman, Indian Journal of Fundamental and Applied Life Sciences, 3 (3), 291-298.

Kayani, A.J., Javed, B., Majeed, A. &Shaukat, A. (2013),Impact of Merger and acquisition on operation performance and shareholder wealth in Pakistan banking sector. Interdisciplinary Journal of Contemporary Research in Business. 5(6),385-391.

Naga S., and Sultana S.T (2013), Financial performance analysis in banking sector- A pre and post-merger perspective, International Monthly Journal of Research in Management and

43

Technology. 5(2), 51-59.

Owolabi, A. and Ajayi, N. O. (2013),Financial efficiency of banks in the pre and post mergers and acquisitions era of banks in Nigeria: a comparative analysis.Global Business and Economics Research Journal, 2(7), 12-27.

Said, H.B. (2013),Tunisian bank mergers and acquisition efficiency,International Journal of Contemporary Business Studies, 4(1), 1-15.

Zaim et al. (2012), Causal analysis of employee satisfaction and performance: A field study in the finance sector, International Journal of Business and Management Studies, 4(2),31-42.

Websites https://www.nicasiabank.com/ https://www.coursehero.com/file/13954911/13-Impact-and-Challenges-of-Merger-andAcquisition-in-Nepalese-Banking-and-Financial-Institutionsd/

44

APPENDIX

Questionnaires: Dear prospective participation, I am Pooja Dhami, student of K & K International College. The following questionnaire is designed to analyze the impact of merger on employee satisfaction and performance of NIC Asia Bank. The information gathered here will constitute a source for a summer project report for TU BBA 7th semester. Therefore, you are asked to fill out the following questionnaire as precisely and accurately as you can. The result will be used for a general assessment and your answers will be used only for this study confidentially.

NOTE :- Your personal information will not be disclosed. Thank you very much for your participation Please tick (√) appropriate answer Name of the respondent …………………………………………………….(Optional)

Personal information 1. a)

2. a)

Gender of respondent Male

b) Female

c) Others

Age of respondent 20-25

b) 26-30

c) 31-35 d) 36-40

Main question covering objectives 1. The major area influenced after the bank merger process is

o Customer relations o Employee performance o Investor’s attitude o Market position o Overall banks performance 45

2. What do you find the impact of merger on investor?

o Strongly Positive o Positive o Neutral o Negative o Strongly negative 3. Working environment of the bank after merger is

o Highly satisfied o Satisfied o Neutral o Dissatisfied o Highly Dissatisfied 4. The merger impact on the productivity of the bank.

o Strongly agree o Agree o Neutral o Disagree o Highly disagree 5.

The merger impact on the profitability of the bank.

o Highly agree o Agree o Neutral o Disagree 46

o Highly Disagree 6.

NIC Asia Bank is more successful after Merger.

o Strongly Agree o Agree o Neutral o Disagree o Strongly disagree 7.

The services provided by the bank improve after merger.

o Strongly agree o Agree o Neutral o Disagree o Strongly disagree 8. Increases the number of customers after merger.

o Strongly agree o Agree o Neutral o Disagree o Strongly disagree 9. Merger brings back employee’s confidence on bank.

o Strongly agree o Agree 47

o Neutral o Disagree o Strongly disagree 10. Do you believe that there is an opportunity for individual career growth and development within the bank after merger?

o Strongly agree o Agree o Neutral o Disagree o Strongly disagree 11. How satisfied are you working with the company after merger?

o Strongly satisfied o Satisfied o Neutral o Dissatisfied o Strongly dissatisfied

48