Stanchart-Grindlays deal: A few observations

The article on Standard Chartered's acquisition of Grindlays operations in South Asia, Middle East and a few other countries by Mr. C. R. L. Narasimhan in The Hindu dated April 30 indeed gives an interesting reading. As a retired executive of ANZ Grindlays Bank and having had 40 years stint in the organisation, I would wish to share a few observations, some of which may be of some substance to the new owners and your readers. These observations are purely my personal views and not intended to create any controversy.

Grindlays unfortunately has been a sad victim of too frequent and too many cultural changes, some of them revolutionary, throwing a lot of people in the organisation out of gear. While mergers and acquisitions in the world have become a trend set for many multinational companies and national conglomerates, the human aspects in this scenario, in my view, seem to be ignored or underplayed. The deep-rooted culture in an organisation prior to merger/takeover is seldom integrated cohesively and personnel in the merged/new entity continue to maintain separate identities leading to misunderstanding, mistrust and even frustration. The bigger and more dominant partners tend to dominate and the others suffer irrespective of their competence/calibre. This was clearly evident in Grindlays.

After National Bank of India, the parent body, took over the business of Grindlays Bank in 1959 and the Eastern Branches of Lloyds Bank in 1961, three different cultures existed for over three decades without getting integrated. The erstwhile Lloyds Bank branches even retained their identity as a "Lloyds Branch''. There were losers, gainers and victims. Even after 30 years, people used to identify themselves as Lloyds, Grindlays or National men. There was always a wedge between them which never got removed.

While this nebulous environment continued, further cultural stock came in 1969 when Citibank took over the management control of the bank consequent upon their extending financial assistance to National and Grindlays Bank (as it was named in 1961 and subsequently changed to Grindlays in 1975) for acquisition of Ottoman Bank Turkey, another addition to the existing imbalance.

Citibank no doubt contributed significantly to the growth in the bank by introducing professionalism as against the practice of laying emphasis on pedigree for selection of executives. In view of the severe competition the old Scottish culture (business could no longer be booked in golf courses) had to be dispensed with by opening up competition within the bank to all concerned. This led to the abolition of a class called "Covenanted Cadre" which, of course, was not received well by that class. Another cultural imbalance!

Citibank also took Grindlays Bank as a platform for secondment of their own senior executives in London (in preference to in-house talents) who could not perhaps reach greater heights in their own organisation. These people had a different attitude particularly towards India. I even heard that some of the wiz kids suggested closure of Indian operations because of high tax incidence. Fortunately, it did not happen and India remained the jewel in the crown and still is.

Citibank's management contract expired in 1979 and they were keen on selling this acquisition. It could not however materialise for five years for various reasons. The organisation therefore carried on with an unwilling/uninterested owner/manager for a considerable length of time, leading to lack of cohesion and clear-cut direction. Finally Citibank sold the bank to ANZ Group in 1984. Again, there was total change in culture from Anglo American to Australia. A lot of changes obviously took place after the ANZ take over, some good and some not so good.

As the bank was struggling to become cohesive, the scam broke out in 1992 resulting in a disastrous shock to all. This naturally shook the confidence of the ANZ group in the Indian outfit and several and frequent changes (may be unhealthy) took place from top to bottom leading to discontentment and demotivation to many in the organisation.

Now with the takeover by Standard Chartered Bank, another major cultural change has occurred. The purpose of this takeover is not clearly understood as Standard Chartered has already been a significant player in this part of the world and whether they would really gain and add further value.

The immediate task of the new owner as has already been stated in the press is to integrate cohesively the two great organisations. They have also recognised the importance of the name "Grindlays" in the subcontinent. Their intention as indicated in the press is indeed laudable and I wish them good luck and success.

T. Kartikeyan

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