A Post-mortem Analysis of a Merger
and a Rightsizing Exercise: The Case of Ecobank
Ghana Limited and the Trust Bank Limited
Majoreen Amankwah(B) and Joyleen Mante
University of Ghana Business School, University of Ghana, Legon, Accra, Ghana
moamankwah@ug.edu.gh
Abstract. The study examined the after effect of a merger and rightsizing strat-
egy employed by Ecobank Ghana Limited and the Trust Bank Limited when they
merged in the year 2012. The aim of the study was to gather data to be able to
create a practice guide for future corporate restructurings. As a qualitative study,
data was collected from twenty (20) survivors using a semi-structured interview
and secondary information for the period 2012–2019. The study found that while
the merger had a significant effect on role and workload, it had little effect on pro-
ductivity and job security. Although the merger had to an extent brought on certain
efficiencies for EGH in terms of its share of operating assets and its asset quality,
it had not achieved efficiency regarding its cost-to-income ratio and liquidity.
Keywords: Merger · Rightsizing · Survivors · Role change · Productivity ·
Efficiency
1 Introduction
In the year 2012, Ecobank Ghana (EGH) underwent a merger with The Trust Bank with
its resultant rightsizing exercise. At the 2012 extra-ordinary general meeting therefore
held on 20th January 2012, shareholders of EGH were asked to consider the benefits
of the merger and so began the marriage of EGH and TTB. The anticipated benefits
to be gained among others were being number one in terms of assets and profitability
out of 26 banks operating in Ghana as at June 30, 2011; enhanced treasury base, wider
geographical presence and enhanced shareholder value through improved financial per-
formance. Sometimes, companies use mergers as strategic positioning tools to perform
their rightsizing activities and stay competitive despite the internal and external chal-
lenges they face in the markets they operate in Osei-Bonsu [14]. A merger is therefore
‘a corporate event in which two companies consolidate to form a new company’ [2,
p. 6]. The merging process can result in some form of rightsizing due to the duplication
of functions. Rightsizing is not something that can be done overnight or rushed hence
involves carefully structured actions or processes to readjust the organisation or parts of
it in order to increase efficiency [11].
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021
I. L. Nunes (Ed.): AHFE 2021, LNNS 265, pp. 174–181, 2021.
https://doi.org/10.1007/978-3-030-79816-1_22
A Post-mortem Analysis of a Merger and a Rightsizing Exercise 175
Thus, rightsizing could involve a reduction in employees, a reduction of the divisions
or units in a firm or even reductions in the hierarchical structure [8]. Anytime a rightsiz-
ing activity is done, there are two groups of people; i.e. victims and survivors. The term
survivors originate from the idea of the survivor syndrome which reflects the physical
and psychological effects that affects workers that are not laid off during a downsizing
activity [20]. Essentially these are employees who remain with the organisation after
rightsizing and are the ones responsible for new business performance and the suc-
cessful implementation of the organisation’s restructuring [21]. The factors accounting
for rightsizing can be both internal and external and usually involves the reduction in
employees to improve productivity and efficiency and also gain competitive advantage in
the market [6]. Apart from some negative consequences of rightsizing such as producing
an undesired culture, there are some positives including cost cutting, financial benefits
and overall organisational performance [12]. Rightsizing could even be considered now
as a standard management practice or a corporate strategy [13].
Literature on the effects of mergers and rightsizing on the role change, the pro-
ductivity, the workload of survivors and the efficiency of the organization abound. For
instance, roles do change thereby leading to role ambiguity, lower commitment, feelings
of insecurity and increase turnover decisions [17]. A relevant explanation for these role
changes in mergers and their resultant rightsizing is that the different processes and poli-
cies of the firm need to be harmonised [16]. It is therefore important that management of
companies provide some coping mechanisms such as rigorous debriefing processes for
survivors since these could improve survivors’ attitudes to their work roles [21]. Poor
communication could lead to mistrust between management and survivors which could
affect the productivity of the survivors [10]. Therefore, a healthy organisational climate
is key to determining whether a survivor would be productive or not [14]. Applying
the equity theory, “during times of organisational change, perceptions of injustice may
not only lead to dissatisfaction, but also to decreased job performance, poor quality of
work, decreased job involvement, increased intentions to leave and less co-operation
with co-workers” [21 p. 23]. Following the distributive justice theory, when employees
“develop negative perceptions about merger-induced organizational changes and also
distrust those managing the changes, their job satisfactions and commitments will also
be negatively affected” [16, p. 30]. An increased workload would not be viewed as
a negative outcome if the increased workload resulted in an increase in income [19].
According to the Social Identity Theory, employees may experience a change or “break
in their comfort zones” pertaining to their colleagues andwork [17]. The Threat-Rigidity
theory also suggests that people respond when they feel threatened whether it is at the
individual, group or even organisational level [18]. In order to improve efficiency of the
organisation, some organisations consider merging and rightsizing as a strategic option
[19]. For instance, Aidoo and Mensah [3] found that an organisation’s share of industry
operating assets can increase after a merging exercise.
The paper examines the effect that the merger had on the survivors regarding (a)
their role changes; (b) productivity; (c) workload; and (d) the efficiency of the merged
bank. Interestingly, while earlier studies had discussed mergers, there always seemed
to be a focus on the financials and a neglect on the effect of the mergers/rightsizing
on the survivors and what became of them after the merger. These earlier studies had
176 M. Amankwah and J. Mante
confirmed that “when a decision is taken to merge or acquire, a company analyses its
feasibility on the business’ financial and legal fronts, but fails to recognise the importance
attached to the human resources of the organizations involved” [17, p. 4]. Thus, there
is a need to review the case of the neglect of the survivors and also prove the case of
efficiency through merging and resultant rightsizing in order to develop a practice guide
on survivors and also bridge the knowledge gap in merging and rightsizing activities.
2 Methodology
This study employed a qualitative approach and the case analysis technique using a semi-
structured interview with twenty survivors of the merged EGH and TTB. This was most
appropriate because it provided the opportunity to have in-depth understanding of the
participants’ experiences and was “particularly helpful in the generation of an intensive,
detailed examination of a case” [5, p. 49]. A purposive sampling technique was used
to select the participants of the study who were survivors from the erstwhile EGH and
TTB, now the merged bank and experienced the merger and resultant rightsizing over
the period of the study (2012–2019). These survivors were identified with the help of the
snowballing technique, where an initial contact was made and further recommendations
of others who shared similar experiences. This technique was most appropriate because
this study excluded workers who were not involved in the merging process. An online
mode was used in collecting data due to the Covid-19 pandemic which prevented an
ideal face to face interview. A semi-structured interview guide was designed comprising
26 questions with data collected between October 2019 to July 2020. There were equal
numbers of males against females in the participants, 95% of them were married, and
80% of them had worked between 5–10 years and 0–5 years at EGH or TTB before the
merger. The remaining 20% of the survivors had been with the company for between
15–20 years and 95% of the participants were full-timers. Secondary information was
sourced from the annual reports and financial information of EGH. The primary data
collectedwas processedwithMicrosoft Excel for the demographic details and a thematic
analysis done where themes that flowed from common threads in the responses of the
participants were utilized. Using Braun and Clarke’s (2006) thematic analysis, the study
identified, analysed and reported patterns within the data. The secondary information
from the annual reports of Ecobank Ghana Limited and the PricewaterhouseCoopers
(PWC)’s Annual Banking Surveys reports for the period 2012–2019 were analysed
by way of document analysis to show whether the efficiency of the merged bank had
increased and if the goal of the merged bank to achieve efficiency through the merger
had been successful.
3 Findings and Discussion
The effect of the merging and resultant rightsizing strategy employed by Ecobank Ghana
Limited and The Trust Bank are summarised hereunder.
A Post-mortem Analysis of a Merger and a Rightsizing Exercise 177
3.1 The Effect of Merger on Role Changes of Survivors
The study showed movement of survivors from one department to another. Ten out
of 20 different departments existing before the merger experienced this movement of
survivors. In the study, 30% of the participants experienced role changes and others
(70%) remained in their roles but experienced different business processes confirming
that roles could be affected because of the “harmonization of the different business
processes and policies of the old firms that merged to form the new firm” [16, p. 32].
Although there had been role changes, some survivors did not have the adequate support
or funding to perform their roles properly and this made closing deals quite difficult.
The changes in roles at the new Ecobank required that the company have some coping
mechanisms in place for survivors so training was common place at the new Ecobank
confirming Tetteh’s [21] suggestion that training was important for survivors after a
rightsizing exercise. Role ambiguity came up during the study because some survivors
claimed that their managers were not very competent in the roles they had been assigned
so this has the tendency of affecting commitment negatively and increasing turnover
decisions of survivors as advanced by Sassah [17]. Others believed that their colleagues
did not understand their roles and even their management information system (MIS) was
inadequate for management decision making. The study found that job security was not
threatened at the new Ecobank although earlier studies had found that survivors faced
job insecurities in such cases [19]. Job security could however be threatened because
more technology was being employed at the new Ecobank through the outsourcing of
banking processes and also because there is no clear understanding by survivors of their
career progression.
3.2 The Effect of Merging and Rightsizing on the Productivity of Survivors
Some survivors (40%) at the new Ecobank found the organisational climate quite pleas-
ing. However, some survivors found the environment rigid and initially unfriendly res-
onating with earlier studies that found that survivors could have negative perceptions
of merging and rightsizing [21]. These negative perceptions must be managed because
according to the distributive justice theory, these could affect commitment and produc-
tivity of survivors. Also, if survivors felt that there was injustice, this could lead to
decreased job performance and lower productivity based on the equity theory [21]. The
Social Identity Theory also came to light as the new environment had brought a change
in the bonds that employees had before the merger and the disruption in their comfort
zones could affect their commitment too. A good corporate environment is however
necessary for survivors to be productive. Also, a small cohort of 30% survivors had
issues with trust and 55% of the participants indicated that the merger had not affected
their trust of management. Rather, the merger had helped to improve the relationship
between management and employees. On the whole however, the trust situation at the
new Ecobank was improving and survivors did not let it affect their productivity at all.
Participants (25%) indicated that management did not share information with staff,
communication was generally poor, and relationships were not cordial at all especially
among EGH and TTB staff because of the unfriendly environment. Organisational Jus-
tice had a key role to play here as the concern was not just on the communication
178 M. Amankwah and J. Mante
of the decision of management to employees but also how management implemented
these decisions. 25% of survivors blamed the communication problems on the merger
but further confirmed that communication had become better over time. The issue of
communication was important because it was essential in making employees knowwhat
management expected from them and helped to prevent rumours and speculations among
employees. Furthermore, the study showed that 60% of participants perceived that office
politics was rife at the new Ecobank. 30% of the participants also indicated that office
politics featured prominently in top positions and some employees were placed in posi-
tions they were not competent enough to handle. There was also the case that not many
TTB staff were in key management positions. Thus, some survivors instead of working
did a lot of bootlicking which wasted time and resources and affected not just the pro-
ductivity of the survivors but also impacted the performance of the merged bank. Issues
of unfairness and inequity therefore came up confirming the distributive justice theory
which could lead to a reduction in effort and a decrease in productivity. A key driver of
productivity at the new Ecobank was self-motivation but not extrinsic motivation from
management. Survivors were self-motivated and neither the motivation by management
nor the lack thereof could drive their motivation nor affect their productivity. Survivors
however were acting in order to conform to expected behaviour at the new Ecobank.
3.3 Effect of Rightsizing on Workload of Survivors
Mergers have been associated with increased workload [21]. The merger at the new
Ecobank had caused an increase in the workload of some of the survivors with some
even experiencing a doubling of their workload. The changes in responsibility made
some participants (50%) to have a change from their previous departments but some
participants did not experience any change in their responsibilities/or workload since
technology reduced their workload and made them more efficient. The concern though
was that the increased workload for some survivors could lead to stress and a decrease in
productivity. The responses of a minority of participants (5%) indicated that some sur-
vivors experienced loss of prestige, recognition, and tangible benefits after the merger.
Benefits at themerged bankwere different for non-full-time employees. Also, themerger
had negatively impacted work life/family balance as it brought with it increased work-
load, working more hours including weekends, stress and less time spent with family.
Family-life based interaction among staff could be rejuvenated and this would improve
the work-life balance. There were elements of unfairness and inequity regarding respon-
sibility and the sharing of work at the new Ecobank. These elements stemmed from
differences in the workforce and then survivor’s commitment to work such that hard-
working people were given more work to do. Also, there was an inherent problem in the
distribution of work because of the structure of roles at the new Ecobank. This created
a situation where some survivors had little to do whiles other were inundated with work
confirming the distributive justice theory of perceptions of survivors regarding unfairness
to them. The bigger problemwas that survivors were not being compensated or rewarded
for the additional workload and the no-reward could lead to underperformance and a
reduction in productivity over time.
A Post-mortem Analysis of a Merger and a Rightsizing Exercise 179
3.4 Effect of Merger on the Efficiency of the Merged Bank
Before the merger, that is in 2011, EGH held 10.2% of the 33% share of industry assets
held by the four largest banks in Ghana. This increased to 12.4% after the merger in the
year 2012. The new Ecobank held its position as having significant share of industry
operating assets over the period 2012 to 2019 andwas only second toGhana Commercial
Bank (GCB) after it rebranded in 2014. The efficiency of the merged bank had therefore
increased based on this measurement and this confirmed that merging could cause an
increase in an organisation’s share of industry operating assets [3]. Also, EGH’s cost-
to-income ratio before the merger was 52% in 2011 but this fell to 50% in 2012 and
was attributed to the merger. The cost-to-income ratio of the merged bank experienced
several fluctuations over the period 2012–2019 with greater efficiency experienced in
some years. On the score of cost-to-income ratio therefore, the efficiency of the merged
bank had increased. The asset quality of themerged bank faced a few challenges. Though
its loan profitability improved to 1.7% in 2012 because of its expansion into the small-
medium enterprise (SME) sector, it had to make provision for credit losses to cater for
the expansion. A decline in specific term loans also led to a decline in its profitability
in 2014. By 2018, the new Ecobank had addressed its impairment losses including its
legacy Bulk Oil Distributor Company (BDC) loan book and thus encouraging a new
phase in the merged bank’s asset quality. In terms of liquid funds/total deposits, the new
Ecobank did not achieve the efficiency intended by the merger. Its liquidity fell over the
period 2012–2015 to an all-time low of 57% in 2015 from 68% in 2011. Even though the
new Ecobank increased its loans and advances in 2018, its liquidity still fell from 76%
in 2017 to 71% in 2018. The liquid funds/total assets of EGH was 0.55 in 2011. After
the merger, this continued to fall for the period between 2012–2019. It was at an all-time
low of 0.43 in 2015 and increased to 0.47 in 2016. The liquid funds/total interest-bearing
liabilities of the merged bank fell generally over the period 2012–2019 even to a low of
0.53 from 0.64 in 2011 before the merger. The merged bank however saw an increase to
0.74 in 2017 but again fell to 0.70 in 2018. The low values of the three liquidity ratios
show a bank that is less than efficient than its counterparts, a finding consistent with
Amoako-Boateng [4]. Thus, regarding liquidity, the efficiency of the merged bank did
not increase with the merger.
4 Conclusion
The case of Ecobank Ghana Limited and The Trust Bank showed that mergers when
used by organisations could affect not just the survivors in the organisation but also have
an effect on how effective the bank could be. Particularly in this case, the mergers had
changed the roles of some survivors and increased others workload. Their productiv-
ity had however not been impacted as they were self-motivated. The fear though was
that having merged for just under a decade, it would be possible that if the corporate
environment was not improved and compensation made fair, employees would leave the
organisation especially since the increased workload did not come with increased com-
pensation but rather promotions were biased. The efficiencies of the merger included a
bigger market share and a more favourable asset quality. However, the cost-to-income
ratio and liquidity over the decade were below expectations considering the benefits that
180 M. Amankwah and J. Mante
were to be derived from the merger. Consequently, the study brought to light certain crit-
ical points which needed further attention for future corporate restructurings. To begin,
mergers would come with role changes but it was important for management to ensure
that survivors did not lose prestige and recognition in the organisation with the role
changes. Productivity of survivors was a lifeline to the performance of the organisation.
In order for survivors to stay productive after a merger strategy with role changes, there
was the need to ensure that survivors remained self-motivated, are well compensated for
their workload, had a conducive work environment and there was opportunity for career
progression in the organisation. If these are absent, in the long run, survivors would re-
adjust their attitude to work and this would affect their productivity and the performance
of the organisation. A merging/rightsizing activity could bring on board technological
change and advancement which would cause the organisation to outsource some of its
processes or practices and this could displace survivors, make them underutilized or
ultimately, render them redundant. Considering that with a merger, there would be a
scramble for positions, it is possible that unhealthy feelings would be created especially
for upper management at the helm of affairs. There was therefore the need to resolve
any differences generated as differences unresolved could fuel bad internal politics not
just for management but also trickle down to all nooks and crannies of the organisation.
An organisation that intended to improve its efficiency could look to other means aside
a merger because it was not a guarantee that it would lead to efficiency of the organi-
sation as the conditions for efficiency including liquidity and cost-to-income ratio were
determined by the market which was ever competitive and dynamic.
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