Cambodia’s banking and finance sector is saturated. New microfinance institutions and foreign banks seemingly enter the market at will, but stricter regulation is coming. To stay ahead of the curve, Sathapana Microfinance and Maruhan Japan Bank agreed last year to merge and form Sathapana Bank PLC, a commercial bank to take on the big players in Cambodia.
Sathapana Bank CEO Oknha Dr. Bun Mony takes us inside a high–profile corporate merger.
Combining Cambodia’s second strongest MFI, which had some 3,600 staff in 160 offices covering all provinces of the country, and a bank with foreign roots has been a challenge, according to CEO Oknha Dr. Bun Mony, who sat down with Management Insider to discuss how the new bank is taking shape six months after consolidation.
Why did this merger happen?
After Maruhan Corporation became the major shareholder in Sathapana Microfinance in 2012, the National Bank of Cambodia advised that they should not be holding shares in two banks and that it would therefore be in the best interests of all parties to consolidate. The final decision to merge comes from the shareholders, but that advice was very important in the decision.
How did you tell staff, and how did they react?
Since the beginning of 2015, staff at all levels have been aware. It is a serious undertaking, and it was important that all staff, and particularly managers, took ownership of their department by preparing policies and an overall plan. It is fair to say that some staff were not happy with the plan to merge, but the majority of staff have come on board. From Maruhan, of 87 staff, only six left. They had other opportunities, and that is their prerogative, but for the Sathapana staff, they all remained in the company.
What changes have you seen from adding a Japanese element to the firm?
There have been some cultural changes within the business, such as morning gatherings, which follow the Japanese style and business culture. This 5-10 minute meeting before work each day gives us an opportunity to review the vision and mission of the bank and also the core values. One of our core values is love, because we feel that if there is love in the workplace, we can easily forgive our colleagues for making mistakes, which allows us to have peace in the workplace and fosters development. The Japanese element has also improved our personal grooming, attention to detail and the quality of our service. Service is very important to us. We want our clients to feel comfortable from the moment they arrive at our premises.
How has the organisation been restructured?
Previously, Sathapana had 11 departments but when we became a commercial bank, we had to lift that to 22 departments, which meant that we had to be very smart with how we restructured our staff. It was essential also that the qualified resources from Maruhan stayed, which most did. We also had to look outside to fill a few specialist positions, such as e-banking, which is now a department of its own. In total, we needed to bring four outsiders to fill positions as department heads, two of which we are still looking for. At the moment, those departments are being run by the deputy.
We also have had to create a training department to ensure we have qualified human resources to fill all the new positions, and that department is headed by the former deputy head of HR. Before, treasury was under the finance department, but now we have a standalone treasury department.
How has HR Policy Changed?
At Sathapana we have gone through many different shareholders and boards of directors over the years—from the US and Europe—which has allowed us to create a very strong HR policy. And as Maruhan was only a small organisation, its HR policies were mostly not applicable to the new, much larger, rm. Therefore, their staff had to mostly adapt to our existing policy. Some areas, however, Sathapana had to adapt to suit Maruhan. The best example is staff salaries: Sathapana preferred to pay 14 months per year, while Maruhan only paid 12 months.
What is the most challenging aspect of a large-scale commercial merger?
I would say that a lot of mergers have not worked in the past because, separately, each party to the merger is looking to take greater benefits; they don’t work together. I can say that for a merger to be accepted from the shareholders down, the board of directors must send down strong orders throughout. If you wait for management and the board to agree on things, there will be no solutions.
What was the strategy for merging departments that existed under both firms?
Facilitated by a Japanese project manager, the HR team from Maruhan and the HR team from Sathapana had many meetings where they discussed and developed a new HR policy, and then they presented it to the board for approval. This was the same for all departments. Not everyone is always happy with the result but sometimes they just have to accept for the sake of the team. This is part of changing, growing, and maturing.
Also, we have had to reassign many employees according to their skill to avoid overlaps. For example, the finance manager from Maruhan is now the finance manager for the commercial bank, but the old Sathapana finance manager has been shifted to head one of the new departments in the new bank. This reshuffling is a good opportunity to analyse effectiveness and reallocate resources.
What new recruitment needs have arisen due to the merger?
We are still recruiting 50 to 100 people every month and there is a lot of training that needs to take place. Now, we have about 3,700 staff and we need at least 300 more by the end of the year. For banking, there are certain skills required and a certain capacity to understand how banks work, particularly for specialist roles that are relatively new here. We need to screen candidates carefully, you can’t just get people from the street.
What is the current state of the merger?
Six months after consolidating, we are still dealing with many issues. At the moment, we are focusing strongly on transforming our human resources from that of a micro finance institution to that of a commercial bank. It is not an easy job and I think it will be a year at least until we are fully converted to serve a commercial bank. The first stage is sustaining 19 branches which are being equipped with full banking facilities. We are organising those workplaces, training the staff and familiarising them with our new products.
Has the merger been a success?
Six months in, it is too early to say whether it has been a success. However, in a time when the whole economic sector is not growing as well as expected, and when we have not dispersed as many loans as expected, we have been able to keep the business running as normal with no major problems.
With Matt Blomberg