Editorial

BANK MERGERS MUST BE TRANSPARENT, PROFESSIONALLY
HANDLED AND MUST NOT BE POLITICALLY MOTIVATED

UNIONS must be CONSULTED

SBEU is particularly concerned that there are no measures to safeguard the interest and job security of employees. We note that BNM has given the Finance Companies the flexibility to rationalize their operations. This will lead to redundancies.

SBEU will not allow retrenchment of our members. Any redundancies must be managed through a voluntary separation scheme with adequate compensation.

SBEU also calls for the parties involved in any financial institution mergers to consult with SBEU and other relevant Banking Unions so that the interests of the employees are also taking into account.

SBEU CALLS for CAUTION 

SBEU is not opposed to mergers. We believe that the numerous Banks and Finance Companies should be consolidated to better face the challenges of not only the current economic crisis, but the long term challenges posed by the liberalization of the Financial services under the World Trade Organization.

However mergers must not be rushed through and must be managed carefully and closely supervised by BNM. Bank mergers must be spread over a period of time to avoid any major upheaval and minimized adverse consequences. Bank mergers must be allowed only if it is in the best interest of all parties: the national economy, customers, shareholders, employees and the community. There must also be synergy in any mergers. Mergers amongst big banks should not be allowed, as there will be massive redundancies. It will be better for big banks to take over smaller Banks and Finance Companies.

Mergers will not necessary be a good thing. Reports in other countries have shown that if Banks merged they may become too big and powerful for banking supervisors to effectively supervise and control them, leading to dramatic bank failures. The BCCI scandal in 1991 is a case in point. Mergers can be best or worse of things. They can be sued to weaken the best of lose a good occasion to punish the worst.

In a world where globalization is a key world and practice, it will be indeed foolish for planners and political leaders to be inward looking and use the so called need to protect the state and country from foreign denomination, even if the 'foreigners' come from another state in the same country. One question begs to be asked. Who are we protecting, the rich businesses or the ordinary citizens? Protectionism has been proven time and again to protect and benefit the privileged few at the expenses of the vast poor.

BANKING must be LEFT to BANKERS, NOT POLITICIANS

One of causes of the financial crisis in the region often cited by economists and policy planners and indeed the IMF, is the close links between politics and business, and indeed between politicians and Banks.

The problems in Indonesia, Thailand and S. Korea are precipitated by the lack of supervision of Banks and their lendings, especially to firms controlled by the directors/owners of the Banks. Malaysia has so far escaped from this problem, to an extent. Therefore BNM must not let any other parties with vested interest any significant say in the mergers.

Banking must be left to bankers and BNM to handle. We call for the introduction of laws to regulate mergers and take overs to ensure that they must:

• protect and advance the interest of depositors

• protect and advance the interest of employees

• protect and advances the interest of the communities in which the bank operates

• prosecute those responsible for reckless lending decisions