ICICI Bank has kicked off its integration process with Bank of Madura (BoM) by making the first lot of transfers of around 450 BoM staffers to ICICI Bank, while 300 ICICI employees have been shifted to BoM branches.
ICICI Bank's managing director and chief executive officer H N Sinor said: "The cross-movement of staff of both the banks has begun. Around 15 ICICI Bank branches are being manned by BoM staff. The cultural integration of both the banks has started too. Also, promotions of BoM staff -- which have been pending for a long time -- is being initiated."
Around 800 officers of BoM will be eligible for promotions. According to industry sources, ICICI Bank has been facing problems on two fronts -- technology and cultural integration.
Sources said on the technology front, the bank was facing problems because only around 80 per cent of the branches have been transferred to a centralised database.
Combined with the integration of BoM, ICICI Bank would face problems with its huge network of branches.
Sinor said his bank is centralising its operations and it was facing problems in the case of some remote branches owing to leased-line glitches.
ICICI Bank will also be scrapping the ISBS platform which BoM was using and set up its own software and hardware. The total cost for the same is around Rs 60 crore.
On the cultural front, Sinor said, "The staff of BoM have been suddenly exposed from a laidback style to a that of a pushy organisation. Some people are therefore going to find it difficult to adjust to ICICI's aggression. An amalgamation is an integration of cultures. However, nothing is insurmountable. There has been an overwhelmingly positive response from the BoM staff including the sub-staff cadre. There are lot of positive vibes."
ICICI Bank had appointed Hewitt & Associates to usher in uniform compensation and work ethos.
According to the cultural mapping done by Hewitt, there is a lot of similarity and synergy in the two organisations. BoM people are strong on the operations side, while ICICI Bank are strong on the marketing side. The amalgamation of both will get the best in both the organisations," says Sinor.
According to analysts, the bank will face problems for the next one year in integrating its operations. However, in the long run, they believe BoM will be a good acquisition.
ICICI Bank is trying to make the rural operations a viable operations by using cheaper technological solutions."
The intermedation cost (servicing cost) for rural branches is very high at around 12 to 15 per cent as in some of the rural branches there are only five transactions per day.
"We are trying to cut down the servicing cost by examining technological solutions," said Sinor.
The bank is following the hub-and-spoke method for its rural branches. Most of the erstwhile BoM rural branches are situated in and around Madurai in three or four districts.
"For a cluster of branches we have created a hub. Eight to ten branches which are near one another will be connected as a spoke. We have already created 3-4 hubs," said Sinor.
ICICI Bank will integrate 155 BoM branches which cover 90 per cent of the business by September, while for the remaining 108 branches it is looking at cheaper options.
