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Muslim Commercial Bank Ltd
Introduction
(A) History
MCB was founded by isphahami and Adamjee families in Calcutta in 1947. innutrition of MCB was done by. Quaide azam an a private bank. It started with a share capital of Rs 3 crore which is divided into 3 million ordinary shares of Rs 100 each. Its registered head office was transferred to Dhaka after Independence Day on 17 august, 1948. subsequently its registered head office was moved from Dhaka to Karachi on 23 august 1957. when Pakistan came into being, more branches were decided to be located in means where jute was cultivated. So MCB had to borne a great loss at the time of position of Pakistan in 1971. Then MCB was nationalized in 1974 when Bhutto govt decided to nationalized of 218 years, the performance of MCB was badly affected by bureaucratic controls and excessive unionization. During that time MCB was deprived of the chance of becoming a uibrants financial institution most of the loans were advanced on political basis and consequently it led to increase bidets and write off. In 1992 it was privatized and govt of Pakistan and transferred the mgt of bank to nishat group (a group of hading industrialists) by selling 26% shanes. Then in 1996 some more on a result 49% shanes had sold in total. After that Mr. Mian M. mansha was having highest number of shomes.
Mission StatementTo become the preferred provider of quality financial services in the country profitability and responsibility and to be the best place to work.
Monogram and slogan
MCB has also changed its monogram and slogan after privatization. So the current monogram and slogan truly reflected and expense its mission vision and philosophy.
Its current slogan is good banking getting even better.
While its monogram defects 3 things
1) Green colour of the monogram shows character of economy that is the growing ad flourishing day by day.
2) Are of monogram shows Islamic style and approach.
3) Free shape of monogram is the symbol for safety and shelter.
(D) popular and scornful services and
products of MCB.
1) MCB ATM 24-hour cash card
i) MCB ATM regular card it allows withdrawal up to Rs. 10,000 per day per
card.
ii) MCB ATM gold card
This card allows withdrawal up to 25,000 per day and a maximum of 6
withdrawals per day per card.
MCB rupee travelers cheques
MCB introduced rupee travelers cheques (RTCs) in 1993 and since then has
enjoyed the largest market share with sales reaching Rs 100 billon on 1999. It has
achieved this leadership position through a commitment to provide superior quality
products backed by MCB. Today RTC are preferred over cash and are card in all
kinds of business and trade transactions, retail purchases as well as traveling.
MCB mobile banking service
Provides Every and quick access to accounts at all times including holidays.
MCB gift cheques
MCB capital growth scheme
MCB prime currency scheme
MCB monthly income scheme
Target market
MCB has no sihqe target market in the whole country. Its target market varies in different cities in large cities like Karachi, Lahore, and Faisalabad where there is more corporate dients. And in small cities where corporate boniness in less then target is milividnal consumes. But in general MCB putting a great emphasis on customer satisfaction never refuses or overlook any of its emphasis.
Market share
MCB has achieved the market share of 15-18% among 35 national banks and is contumacy improving it.
Major competitors
MCB is leading all the national banks. Habib Bank and Allied Bank are its compatriots which are still many steps behind MCB. They are contumely trying to grasp the position of MCB but MCB has been successful every time in proving it self best bank.
Branch network
Cultural Changes Process In MCB
a) Major areas of cultural change after privatization .
In the following section we will describe that how MCB has changed its culture.
MCB has brought changes after its privatization in the following areas.
Compensation system
Appraisal system
Technological changes
Better products and services
Training program
Motivation of employees
Benefits for employees
1. Vision of change
The path to success is a long and winding one. And it is on that road that the true
test of a successful banks lies. The journey becomes important the pinnacle does
not .
By the year 2001, MCB will have a highly motivated professional team who will
provide Quality Customer Service, Expand and Penetrate the customers Base, in
order to improve profitability so that we can Pay Regular Dividend and increase
our Share value.
The relationship between the banker and his customer is an extra ordinary one.
Keeping the balance between the personal and the professional is essential and a
good measure of success.
2- Staffing
After privatization, the main goal for the top was to achieve international standard of banking with repute of preferred bank for customer, highly technological oriented, prestigious interior.
Customer oriented and advanced technological oriented bank that can cop with
internal standard of banking.
The quotient problem was to manage this change. The previous people were unable
to run with the pace of this age. To run with this age of competition MCB needed
new people with new and international trends. On the other hand had to call off the
incapable employee.
Golden Hand Shake
MCB didn’t deal a single employee with iron hand in order to achieve their
mission of preferred provider of quality financial services with international
standards. Rather they deal with employees with the scheme of Golden Hand
Scheme who were unable to absorb new changes and showed their own
willingness to avoid the opportunity but the management didn’t force them to leave
their jobs.
Recruitment
In order to introduce and inject desired changes in bank most of the recruitments
were made of external sources.
For executives and higher level posts, 90% of recruitments were made from
leadings and foreign banks and the other lower levels posts were filled with
professionally Qualified candidates i.e. MBA’s , M. Com’s, Computer
Programming etc from well recognized National and international universities. So
now these new injections made it possible to get access to new approach and new
trends in banking.
Selection
According to previous culture of MCB, there was lack of transparency in the
process of selection. Also the references have great role in selection. But according
to new culture, there is a very transparent and objective procedure for selection i.e.
advertisement is given in newspaper, having proper specifications for the
employees needed. After test was conducted and ultimately employees are selected
on open merit basis.
3) Increased Employees Benefits
MCB has decided to offer wide range of benefits for its employees to engage them.
So that they feel themselves an important part of organization. The purpose of top
management was to give them such environment where they feel that top
management is so caring for their employees. To satisfy their employees
management should be aware of their needs. The benefits they are offering one
covering all needs of any employees.
For the employees who want loan
House building loan
Medical facility
Education allowance
Conveyance loans
Computer loan facility
House Building Loan Of the employees who don’t have reasonable accommodation, MCB offers a very
suitable house building loan.
Contain share of the credit is free certain portion is on low mark up base. Any
employee can get 80 times loan of its basic salary. For example if an employ can
get loan of two lac, and forty thousands.
Conveyance Loan MCB is giving medical facility for their employees. For that every good hospitals
one in its panel officers are offered this facility for them, their spouse and children.
For None of them – officers, parents are also included for medical facility.
Education Allowance
MCB is also giving education allowance for the children of employees. Education
allowance is for None of them – officers only. Officers already have reasonable
salaries, which covers all of their needs.
Computer Loan Facility They want to train their employees according to the requirements of the current
age. For their financial support in this area, they are offering computer loan
facility. So that they buy their own computers and make themselves an expert in it.
4) Improved compensation system
after privatization, the salary scale are revised one reviewed upward. In 1997, they
have given 35% increments of their basic salary. Since its privatization employees
have got increments in salary twice. Third time the increments are done.
5) performance appraisals
MCB have a very regular and transparent appraisal system. The basic requirement
for the consideration to be promoted is three years period. A performance is used
for appraisal which has different ratings. According to these ratings employees are
given different ranks and starting from A to E. rank E is the worst. Employees
performance position is communicated him to writing so that he can improved.
Benefit of transparent appraisal is that employee can himself work out his
performance on criteria.
Promotion
The promotion criteria was previously on subjective done. Now they have changed
their criteria. Now promotions are done on totally objective basis. This change has
decreased the confusions in the mind of employees. Annually the promotion
meetings are held. Executives and officers are promoted on alternate years.
6) Training programs
Training programs are offered for their existing and even employees. These
programs are according to realistic, theoretical and practical approaches and
expanding needs of the business. They have staff colleges at Lahore, Karachi and
Islamabad.
7) Improved Working Condition
Working environment is very comfortable, suitable working condition for the
employees so that they can commercially work in the offices. By keeping in mind
the sensitivity of the weather both services are given. In the summer all the offices
of different cities provides central air conditioning, and in the winter heater facility
is provided. Moreover each year furniture is renovated. They have improved their
interior decor of their buildings.
8) change in employee attitude toward work
Because of objectivity of performance appraisal now the employee of MCB have
become more professional.
9) Better communication network
Now MCB has an improved and advanced net work in order to communicate with
customers and employees. So that they can get information about the need and
desired of their customers and employees. This improved communication network
is the major source of increased profitability and improved performance of MCB.
Because effective communication and appropriate response by top management of
MCB have resulted in customer satisfaction as well as employee satisfaction.
Different way for communication adopted by to communicate with their
employees MCB are formal and informal of staff members.
Also the monthly circular published by MCB “MCB World” is a great source for
employee to get aware with the social activities of employees and the bank and
also with the new projects and products of the bank.
Inorder to have effective communication with employees and customers, GM has
to take visit within every six months and a regional manager has to take visits after
two months. These are the mandatory by GM and PM. They also contact and
communicate directly with their valuable existing and prospects customers only at
head office level.
10) Advancement in technology
MCB branch are 100% computerized in districts and are more than 50%
computerized in tehseeles. More than 60 million locations are linked on line world
wide.
19 cities in Pakistan are connected with on line service. Two remarkable
advancements in technology of MCB are the introductions of MCB mobile
banking and MCT ATM 24-hour cash card.
MCB mobile banking providing the convenience of accessing account balance
information and mini statements whenever wants or may need them, with comfort
and peace of mind.
MCB Mobile Banking Services is available to MCB ATM card holders, 24 hours
365 days. MCB with over 80 ATMs in 12 cities has the large ATM network in
Pakistan. The success of our ATM network can be gauged from the fact that we
have over 150000 MCB ATM card holders enjoying 24-hours withdrawal
facilities. MCB has now gone a step further and extended its ATM network to
other banks via its recently introduced switch, MNET. Thus leadership in
information technology will also follow suit with the bank already being a leader in
the Rupee Traveler Cheque Business.
MNET is basically a platform for enhanced network accessibility and secure on
line financial transactions.
Member banks signing in will not only expand their online network but would also
be able to use each other’s ATM machines. At present, six international banks have
already signed in including Faysal Bank, Standard Chartered, Grindlays, Citi Bank,
American Express, Credit Agricole and Hong Kong Shanghai Bank. They were
customers of members banks are expected to have access to the largest combined
network of over 110 ATMs in 13 cities conveniently located across the country.
This combined network is expected to grow to more than 150 ATMs in 16 across
the country by year end 2001.
11) Structural Change
in 1999 MCB changed its structured by dividing its business into three major
segments on the base of credit portfolio. These are the three major segments.
Corporate
Commercial
Consumer
Corporate segments include the credit of above 20 million and below comes under
consumer segments include the credit of within the range of 2 million to 20
million.
Credit of 2 million and below comes under consumer segments. For one years
these segments worked. Then in the June 2000, MCB was restructured again and
merged consumer segment into commercial segment. As a result, now there are
three segments, corporate commercials and priority banking.
b) Banking
for brining the changes in the above written areas MCB had to face many
problems. No change process is problemless. Likewise MCB faced problems in
these areas.
Resistance for new approaches form existing employees was not ready to accept
the change. Because they are working in the routinely fashion. They wanted to
work on the previous set working methods. But management decided to change
that old culture because they were not leading the bank towards a progressive
direction.
b) Resistance From Unions
Previously, the union had a very strong role in the management decisions. They
had always interfered with the management concerns by force and used their
power for destructive purpose only. So management have totally dismantled the
unions. Now the registered unions are only in books and have no practical work.
c) Unawareness Of The Worth Of Training Programs
management was willing to train the previous as well as new employees. The
problem they were facing was that people were not ready to learn new trends.
Previous employees were not aware of the benefits of training
d) Difficulty In Technological Adaptability
MCB was focusing on the technology side. So employees, had a fear in mind that
they would be unable to operate the machines. Employees thought that machines
can work more fastely and more employees will be laid off with more technology.
They were sacred of being misfit in the new culture.
There was a in the minds of employees. They had developed a very strong attitude,
which a very difficulty to change. Attitudes of high intensity become beliefs. To
lead the bank towards their mission, management needed the co-operation of their
employees. For their co-operation attitudes one needed to be changed. Changing
attitude was the biggest problem. They had lack of professionally in their attitude.
C) Copying strategies
Management adopted the following strategies to handle all mental problem.
d) Golden Hand Shake Scheme
After privatization management brought a lot of changes in the culture of the
organization but some people were reluctant to adopt those changes. So by keeping
in mind those people who unable creating difficulties in achieving the new set
goals, to follow the new trends, management introduced the scheme of Golden
Hand Shake Scheme for the employees. In this way management gave the
opportunity to their employees to find new way for them. This strategy worked
very well especially for new coming the resistance from the employees. The main
strength of this strategy was that management did not impose their decision on the
employees for the following strategy rather people who were creating difficulties
for the unwillingly followed this strategy.
Correcting The Role Of Unions
Before privatization unions had a very strong role. The role unions were playing
was very self occupied. The role of union has changed and it has brought now
within them rights. So MCB strategy was to certain limits. Several other banks also
proposed SBP that in order to regulate the operations of bank, it is inevitable to put
a check on the interference of unions in management decisions. This matter was
done unless the notice of SBP, Ministry of finance and ministry of labour.
Amendment was done in law by addition of clause 27-B. so according to existing
culture of MCB, unions were doing their appropriate and constructive job of
collective becoming agent.
Convincing Employees For The Worth Of Training
Employees existing employees there reluctant to adopt new changes, to run units
the pace of modern time, they were not ready to accept all these new changes, so
that they can learn about new technology, new changes. Management informed
them that the organization will train them in order to learn about here new changed
areas, management tried to motivate them that all these changes are fro the benefit
and for the progress of the bank.
5) Intrinsic Motivation By Objectivity Transparency
And Better Working Condition
MCB is using both intrinstic and extrinsic motivation for posting up the morale
employees. But major part of motivation is intrinsic. MCB has changed
subjectivity to objectivity, confusing and vague to clear and transparent culture and
undesirable to desirable working culture. Employees have not confusions in their
minds about their performances approval or promotion criteria. Now they know
that their promotions and appraisal in strictly on the base of performance and
nothing else.
6) Extriusic Motivation By Benefits And Services
a good motivation plan is that which first identifies and then efficiently fulfils the
needs of employees MCB has a very nice system of benefits and services which
covers every need of employees.
SWOT Analysis
Internal Environment
Strength
1) Long Establishment
Is one of the strength of MCB over private banks .Due to this, it earns a name in the market .
2) The biggest infrastructure
MCB has the biggest infrastructure among all the privates bank. So it is making
business from one corner of the country to another corner of the country.
Sponsors
The sponsors of MCB are the business instantiations. They develop the strategic
policies for the org because they have a broad vision that is why MCB progress day
offer day.
Conservative in loaning
MCB provides loans to comer trade and industry on marit basis. MCB has developed its
loaning policy which based only on realization of facts and figures of the borrowers. If
the borrower meets thee requirement and standards then the banks feels no hesitation
for advancing loans to party.
So advances are given only on merit that is why the banks has no bad debt parts
folio. This factor is alo the strength at MCB
Cost Conscious:
Cost conscious in this sense that the mgt. Of MCB always try to reduce its extra
expenses, that is why after the privatization of bank the mgt decided to abolish some
regional offices and provincial head offices.
WeaknessesIn the changing environment where MCB has some strength it has some weakness
also, some of the weak factors
None Professional Staff
MCB keeps non-professional staff even on higher posts who are promoted from the
typist and clerical area after a long time.
Nationalization Effect
When MCB was nationalization by Bhutto’s Govt’s it was the gloomy period for MCB.
During that period, MCB suffered a lot.
Govt. Influence
Non-professional and bureaucratic people were placed at the top level mgt who knows
nothing about the banking and they damaged the repute of the bank in the markets a
well
Lack of Dynamism
When the person gets employment in the bank , he hardly leaves the bank. He gets
promotion to higher position and want to do some thing for bank, it is to late because
soon he ha to get retired. So lack at dynamism comes to his personality. He is no
further creative in his life. So increasing age of staff is one of the weakness of the bank
because banks needs young and creative person who have the ability to met the
changing response of the environment .
Advances To Non Productive Units
During the nationalized period, a lot of amounts are forward to non productive unit just
on political basis. The political influence of the Govt hundred the progress of MCB and
most of thee advances are still not recovered and none of them have been written off.
External Environment
Opportunities
Edge over other Commercial Bank
MCB has greater profits, greater growth rate and market share than other commercial
bank.
Privatization
After privatization the banks deposits has accelerated with tremendous speed because
it gave the opportunity to get rid of critical influence and to put the bank on professional
roots
Threats
Private Banks
Like city bank, Grinblays, ABN amroete are entering in the market with greater power
and strength in terms of brand name
Govt. Policies
MCB faces a great threat from Govt policies like as finance the non-productive units,
housing etc. so the bank does not feel freedom in operating on its own view points, that
is a threat for the bank. Because bank is purely commercial so it should have an
autonomy to make its own decisions.
Bank As Tax Collecting Egency
One of the major threat to banking industry as whole I wrong perception of the Govt,
about bankas tax collecting agents. So tax collection on the behalf of the Govt is the
way of hurdle in the efficiency of bank.
Because it is evident that as the Govt, increases the tax on the rupee traveler cheque.(RTC), the sale of cheques goes on decreasing. For examples on the sale of RTC of RS-50000 bank charges only Rs. 20 a its commission and govt changesRs-100 as thence, we come to conclusion that bank as tax collecting agency hinders the bank on commercial working.
Best Analysis
Political factors have a great impact on financial institutions. Banking business
exposal in case of political stability. Like wise political in stability and uncertainty
can adversely affect banking business. For example atomic bomb blast in 1999
resulted in heavily.
With drawl of foreign currency even in one of the branch of MCB. Foreign
reserves reduced from 1 billion to 300 million
Economic and political faders are costly co-related. But economic factors are most
of the times more important then political factors as all type of activities are
directly related with market condition. Boom in market or economy will result in
the expansion of banking business and vice versa. Also the regions with more
investment avenues, the bank will extend more advances and the deposits will be
in banner amount. Whole the areas or regions of MCB where there are banner
invest ional amount of loans.
For example, the amount of deposit in the big city of tarsal abed is banner than of
small city of Chakwal. The reason for such as difference is that Faisalabad have a
great investment avenues in textile industry and a lot of commercial activity. If we
customers like to invest the money in such type of investment events and get loan
for the expension of their business. But opposite is the case with small city of
CHAKWAL.
Social aspects have also a lunge impact on banking business and ultimately on
MCB also if in any society, people belonging to middle class and appears class one
high, banking business can finish. In Pakistan, middle class is biggest. Middle class
prefer to deposit then saving in bank. Upper class which is small in size but big in
financial strength, deposit in bank and also have other investment opportunities in
Pakistan, the literacy note I also very low, so people connect awaid opportunities
of earning the average income level is very les. So banks are not getting any
significant profit from common individual. Because they have to discretion my
income.
In the area of advanced technology MCB is the leading bank of Pakistan with the
initiator of the user of highly advanced technology in its operation I-e online
banking, ATNA service, mobile banking etc these type of technological advances
have resulted in the competitive edge of the bank in over all banking sector and
also has created value and satisfaction for the employs as well as for customer. But
MCB title have to achieve their target of paper less organization in near future.
Future MCBFuture outlook
The year 2001 is expected to pose a tough market environment. Shortage of rains
can seriously impact overall GDP growth. The tight monetary policy is impacting
the credit appetite of the private sector. Slowdown in the US economy will after
the country’s exports with a ripple effect on the manufacturing sector. The
documentation drive, which is good for the country over a longperiod of time, is
being expectantly viewed with concern by certain segments. The combined impact
of these factors may cause a slowdown of economic activity in certain pockets of
the economy.
On the positive side, the resolution of issues in the energy sector, pragmatic
handling of the documentation drive by the government and continuous efforts to
normalize international relations should bring positive results.
MCS is well positioned and flexible enough to operate effectively in the dchanging
scenario. We will continure to broaden our customer base, harnessing the growing
strength of the MCH brand and expand the IT platform to provide value based
propositions to our customers.
Recommendations
MCB does not offer any chances of chances of social gathering for staff. There
should be some informal meeting arrangements to restore the atmosphere of
mutual trust and confidence and to give them respect. Such type of gatherings are
very important to develop an attitude in mind of employees that mgt cane for them.
So employees work with more commitment.
MCB is not currently giving owner ship to employees. It should give certain
percentage of shares to employees to develop a feeling of belonging in them. When
employees own the on. They own its strengths and weal nesses also. So they
readily start working for its progress.
In MCB, there is no culture of encouraging new ideas. Employees should not be
considered on Robots. They have brains of their own. They should be thought to
use the brains on well on hand. Because they one the night people who are as
possible for operations and can give best suggestion.
MCB has uniqueness in their business. But their Differentiator should be in all
fields. Differentiation can be alone in location.
MCB has not built any connection with its customers. For knowing their
suggestions about you services . There should be a proper channel for him. They
can cord net move silvers and savvies and their should have their separately for the
suggestion at completes.
Outcomes of cultural change
Creating marketing value
Perpetuating enhanced level of value creation, for all stakeholders is the basis of
the long-term strategic focus of the Bank. This entails a multi-pronged approach
wherein a series of initiatives should ensure sustained profitable growth via
prudent risk management, introduction of competitively priced new products and
services for customer’s retention and acquisition and reducing the Bank’s
intermediation cost.
Increased financial strength
As the result of coping strategies MCB has now increased it market share from
15% to 18% among 35 national and international banks. This share was 12% just
few years back. MCB has been able to increase its share just because of its
innovative and high quality products and services.
Increased Financial strength
The results for the year 2000 are indicative of sustaining our growing focus
strategies in long-term plans.
Operating Profit (before provisions) has shown a health growth of 58 percent, from
PKR 1.56 billion in 1999 to PKR 2.48 billion in 2000. This was achieved via
managing asset and liability growth at improved margins and aggressively
controlling administrative expenses. Efforts continue to improve the cost to income
ratio enabling the Bank to further strengthen its financial position.
Profit after tax for the year ended December 2000 was PKR 735 million, an
increase of 29 percent over 1999. This is commendable in an environment
characterized by fluctuating money market rates, low commodity prices and
subdued economic activity.
Deposits at December 31,2000 were PKR 136 billion increasing from PKR 130
billion last year. Given the competitive environment, low PLS rates on deposits
due to limited opportunities to deploy funds in the banking sector, and the drain of
deposits in the second half of the year resulting from the documentation drive of
the government, the growth in deposits were satisfactory.
Gross Advances as at December 31,2000 stood at PKR 90.9 billion – an increase
of PKR 19.5 billion or 27 percent. Our Bank continues to follow a prudent,
selective asset acquiring policy and through focused efforts was able to capitalize
on opportunities in a timely manner.
The efforts on recovery were sustained and improved in the year 2000 and the
Bank managed to recover PKR 1.29 Billion (1999-PKR1.29 billion). An
aggressive policy on classification was followed and MCB continues to identify
problem loans up front and take immediate remedial measures.
Competitive EdgeMCB is rightly refardeal as a trend setter bank as its is innovative for most of its
successful products and services and most of the other bank have followed its
scheme and copied its products I-e
Monthly deposit scheme was firstly introduced by MCB and then followed by
other banks. Same is the care with rupee travelers cheques, MCB Mobile.
Banking ,ATM service etc
Currently its most recent innovation is MCB gift cheques which way be co sidereal
as the form of RTC and has proved very Successful and popular on the exert of
Eid.
6.Customer Satisfaction
The world has entered a new era, so has banking. The modern customer wants
excellent service and newer lost effective products at his finger tips. With a
mission to meet customer’s expectations and a vision to be the preferred provider
of financial services, MCB has come a long way. And, with the same enthusiasm
keeps achieving goal after goal, aim after aim.
So, MCB has made its customers satisfied by its continue red focus on product
improvement a innovation.
Employee Satisfaction
By appropriately utilizing the techniques of intrinsic a extrinsic inactivation , MCB has become successful in achieving employees satisfaction .They are more committed towards their institution a are more involved towards their jobs. The major source of thedir satisfaction is the equal opportunity they are having in order to fulfill their career aspirations.
Enhanced image and recognitions by foreign
institutions
A bank which was “priestly said to be “ Dak khana” a very inferior institution is
now an awand winning bank of Pakistan.It has given ceremony award twice. In
2000,euromoney awed was given for benign No.1 in domestic Banks. In 2001, it
has again won the award of “Best Bank in Pakistan “ in the over all banking Sector
including foreign Banks as well.
Cultural Changes Process In MCB
a) Major areas of cultural change after privatization .
In the following section we will describe that how MCB has changed its culture.
MCB has brought changes after its privatization in the following areas.
Compensation system
Appraisal system
Technological changes
Better products and services
Training program
Motivation of employees
Benefits for employees
1. Vision of change
The path to success is a long and winding one. And it is on that road that the true
test of a successful banks lies. The journey becomes important the pinnacle does
not .
By the year 2001, MCB will have a highly motivated professional team who will
provide Quality Customer Service, Expand and Penetrate the customers Base, in
order to improve profitability so that we can Pay Regular Dividend and increase
our Share value.
The relationship between the banker and his customer is an extra ordinary one.
Keeping the balance between the personal and the professional is essential and a
good measure of success.
2- Staffing
After privatization, the main goal for the top was to achieve international standard of banking with repute of preferred bank for customer, highly technological oriented, prestigious interior.
Customer oriented and advanced technological oriented bank that can cop with
internal standard of banking.
The quotient problem was to manage this change. The previous people were unable
to run with the pace of this age. To run with this age of competition MCB needed
new people with new and international trends. On the other hand had to call off the
incapable employee.
Golden Hand Shake
MCB didn’t deal a single employee with iron hand in order to achieve their
mission of preferred provider of quality financial services with international
standards. Rather they deal with employees with the scheme of Golden Hand
Scheme who were unable to absorb new changes and showed their own
willingness to avoid the opportunity but the management didn’t force them to leave
their jobs.
Recruitment
In order to introduce and inject desired changes in bank most of the recruitments
were made of external sources.
For executives and higher level posts, 90% of recruitments were made from
leadings and foreign banks and the other lower levels posts were filled with
professionally Qualified candidates i.e. MBA’s , M. Com’s, Computer
Programming etc from well recognized National and international universities. So
now these new injections made it possible to get access to new approach and new
trends in banking.
Selection
According to previous culture of MCB, there was lack of transparency in the
process of selection. Also the references have great role in selection. But according
to new culture, there is a very transparent and objective procedure for selection i.e.
advertisement is given in newspaper, having proper specifications for the
employees needed. After test was conducted and ultimately employees are selected
on open merit basis.
3) Increased Employees Benefits
MCB has decided to offer wide range of benefits for its employees to engage them.
So that they feel themselves an important part of organization. The purpose of top
management was to give them such environment where they feel that top
management is so caring for their employees. To satisfy their employees
management should be aware of their needs. The benefits they are offering one
covering all needs of any employees.
For the employees who want loan
House building loan
Medical facility
Education allowance
Conveyance loans
Computer loan facility
House Building Loan Of the employees who don’t have reasonable accommodation, MCB offers a very
suitable house building loan.
Contain share of the credit is free certain portion is on low mark up base. Any
employee can get 80 times loan of its basic salary. For example if an employ can
get loan of two lac, and forty thousands.
Conveyance Loan MCB is giving medical facility for their employees. For that every good hospitals
one in its panel officers are offered this facility for them, their spouse and children.
For None of them – officers, parents are also included for medical facility.
Education Allowance MCB is also giving education allowance for the children of employees. Education
allowance is for None of them – officers only. Officers already have reasonable
salaries, which covers all of their needs.
Computer Loan Facility
They want to train their employees according to the requirements of the current
age. For their financial support in this area, they are offering computer loan
facility. So that they buy their own computers and make themselves an expert in it.
4) Improved compensation system
after privatization, the salary scale are revised one reviewed upward. In 1997, they
have given 35% increments of their basic salary. Since its privatization employees
have got increments in salary twice. Third time the increments are done.
5) performance appraisals
MCB have a very regular and transparent appraisal system. The basic requirement
for the consideration to be promoted is three years period. A performance is used
for appraisal which has different ratings. According to these ratings employees are
given different ranks and starting from A to E. rank E is the worst. Employees
performance position is communicated him to writing so that he can improved.
Benefit of transparent appraisal is that employee can himself work out his
performance on criteria.
Promotion The promotion criteria was previously on subjective done. Now they have changed
their criteria. Now promotions are done on totally objective basis. This change has
decreased the confusions in the mind of employees. Annually the promotion
meetings are held. Executives and officers are promoted on alternate years.
6) Training programs
Training programs are offered for their existing and even employees. These
programs are according to realistic, theoretical and practical approaches and
expanding needs of the business. They have staff colleges at Lahore, Karachi and
Islamabad.
7) Improved Working Condition
Working environment is very comfortable, suitable working condition for the
employees so that they can commercially work in the offices. By keeping in mind
the sensitivity of the weather both services are given. In the summer all the offices
of different cities provides central air conditioning, and in the winter heater facility
is provided. Moreover each year furniture is renovated. They have improved their
interior decor of their buildings.
8) change in employee attitude toward work
Because of objectivity of performance appraisal now the employee of MCB have
become more professional.
9) Better communication network
Now MCB has an improved and advanced net work in order to communicate with
customers and employees. So that they can get information about the need and
desired of their customers and employees. This improved communication network
is the major source of increased profitability and improved performance of MCB.
Because effective communication and appropriate response by top management of
MCB have resulted in customer satisfaction as well as employee satisfaction.
Different way for communication adopted by to communicate with their
employees MCB are formal and informal of staff members.
Also the monthly circular published by MCB “MCB World” is a great source for
employee to get aware with the social activities of employees and the bank and
also with the new projects and products of the bank.
Inorder to have effective communication with employees and customers, GM has
to take visit within every six months and a regional manager has to take visits after
two months. These are the mandatory by GM and PM. They also contact and
communicate directly with their valuable existing and prospects customers only at
head office level.
10) Advancement in technology
MCB branch are 100% computerized in districts and are more than 50%
computerized in tehseeles. More than 60 million locations are linked on line world
wide.
19 cities in Pakistan are connected with on line service. Two remarkable
advancements in technology of MCB are the introductions of MCB mobile
banking and MCT ATM 24-hour cash card.
MCB mobile banking providing the convenience of accessing account balance
information and mini statements whenever wants or may need them, with comfort
and peace of mind.
MCB Mobile Banking Services is available to MCB ATM card holders, 24 hours
365 days. MCB with over 80 ATMs in 12 cities has the large ATM network in
Pakistan. The success of our ATM network can be gauged from the fact that we
have over 150000 MCB ATM card holders enjoying 24-hours withdrawal
facilities. MCB has now gone a step further and extended its ATM network to
other banks via its recently introduced switch, MNET. Thus leadership in
information technology will also follow suit with the bank already being a leader in
the Rupee Traveler Cheque Business.
MNET is basically a platform for enhanced network accessibility and secure on
line financial transactions.
Member banks signing in will not only expand their online network but would also
be able to use each other’s ATM machines. At present, six international banks have
already signed in including Faysal Bank, Standard Chartered, Grindlays, Citi Bank,
American Express, Credit Agricole and Hong Kong Shanghai Bank. They were
customers of members banks are expected to have access to the largest combined
network of over 110 ATMs in 13 cities conveniently located across the country.
This combined network is expected to grow to more than 150 ATMs in 16 across
the country by year end 2001.
11) Structural Change
in 1999 MCB changed its structured by dividing its business into three major
segments on the base of credit portfolio. These are the three major segments.
Corporate
Commercial
Consumer
Corporate segments include the credit of above 20 million and below comes under
consumer segments include the credit of within the range of 2 million to 20
million.
Credit of 2 million and below comes under consumer segments. For one years
these segments worked. Then in the June 2000, MCB was restructured again and
merged consumer segment into commercial segment. As a result, now there are
three segments, corporate commercials and priority banking.
b) Banking
for brining the changes in the above written areas MCB had to face many
problems. No change process is problemless. Likewise MCB faced problems in
these areas.
Resistance for new approaches form existing employees was not ready to accept
the change. Because they are working in the routinely fashion. They wanted to
work on the previous set working methods. But management decided to change
that old culture because they were not leading the bank towards a progressive
direction.
b) Resistance From Unions
Previously, the union had a very strong role in the management decisions. They
had always interfered with the management concerns by force and used their
power for destructive purpose only. So management have totally dismantled the
unions. Now the registered unions are only in books and have no practical work.
c) Unawareness Of The Worth Of Training Programs
management was willing to train the previous as well as new employees. The
problem they were facing was that people were not ready to learn new trends.
Previous employees were not aware of the benefits of training
d) Difficulty In Technological Adaptability
MCB was focusing on the technology side. So employees, had a fear in mind that
they would be unable to operate the machines. Employees thought that machines
can work more fastely and more employees will be laid off with more technology.
They were sacred of being misfit in the new culture.
There was a in the minds of employees. They had developed a very strong attitude,
which a very difficulty to change. Attitudes of high intensity become beliefs. To
lead the bank towards their mission, management needed the co-operation of their
employees. For their co-operation attitudes one needed to be changed. Changing
attitude was the biggest problem. They had lack of professionally in their attitude.
C) Copying strategies
Management adopted the following strategies to handle all mental problem.
d) Golden Hand Shake Scheme
After privatization management brought a lot of changes in the culture of the
organization but some people were reluctant to adopt those changes. So by keeping
in mind those people who unable creating difficulties in achieving the new set
goals, to follow the new trends, management introduced the scheme of Golden
Hand Shake Scheme for the employees. In this way management gave the
opportunity to their employees to find new way for them. This strategy worked
very well especially for new coming the resistance from the employees. The main
strength of this strategy was that management did not impose their decision on the
employees for the following strategy rather people who were creating difficulties
for the unwillingly followed this strategy.
Correcting The Role Of Unions
Before privatization unions had a very strong role. The role unions were playing
was very self occupied. The role of union has changed and it has brought now
within them rights. So MCB strategy was to certain limits. Several other banks also
proposed SBP that in order to regulate the operations of bank, it is inevitable to put
a check on the interference of unions in management decisions. This matter was
done unless the notice of SBP, Ministry of finance and ministry of labour.
Amendment was done in law by addition of clause 27-B. so according to existing
culture of MCB, unions were doing their appropriate and constructive job of
collective becoming agent.
Convincing Employees For The Worth Of Training
Employees existing employees there reluctant to adopt new changes, to run units
the pace of modern time, they were not ready to accept all these new changes, so
that they can learn about new technology, new changes. Management informed
them that the organization will train them in order to learn about here new changed
areas, management tried to motivate them that all these changes are fro the benefit
and for the progress of the bank.
5) Intrinsic Motivation By Objectivity Transparency
And Better Working Condition
MCB is using both intrinstic and extrinsic motivation for posting up the morale
employees. But major part of motivation is intrinsic. MCB has changed
subjectivity to objectivity, confusing and vague to clear and transparent culture and
undesirable to desirable working culture. Employees have not confusions in their
minds about their performances approval or promotion criteria. Now they know
that their promotions and appraisal in strictly on the base of performance and
nothing else.
6) Extriusic Motivation By Benefits And Services
a good motivation plan is that which first identifies and then efficiently fulfils the
needs of employees MCB has a very nice system of benefits and services which
covers every need of employees.
SWOT Analysis
Internal Environment
Strength
1) Long Establishment
Is one of the strength of MCB over private banks .Due to this, it earns a name in the market .
2) The biggest infrastructure
MCB has the biggest infrastructure among all the privates bank. So it is making
business from one corner of the country to another corner of the country.
Sponsors
The sponsors of MCB are the business instantiations. They develop the strategic
policies for the org because they have a broad vision that is why MCB progress day
offer day.
Conservative in loaning
MCB provides loans to comer trade and industry on marit basis. MCB has developed its
loaning policy which based only on realization of facts and figures of the borrowers. If
the borrower meets thee requirement and standards then the banks feels no hesitation
for advancing loans to party.
So advances are given only on merit that is why the banks has no bad debt parts
folio. This factor is alo the strength at MCB
Cost Conscious:
Cost conscious in this sense that the mgt. Of MCB always try to reduce its extra
expenses, that is why after the privatization of bank the mgt decided to abolish some
regional offices and provincial head offices.
WeaknessesIn the changing environment where MCB has some strength it has some weakness
also, some of the weak factors
None Professional Staff
MCB keeps non-professional staff even on higher posts who are promoted from the
typist and clerical area after a long time.
Nationalization Effect
When MCB was nationalization by Bhutto’s Govt’s it was the gloomy period for MCB.
During that period, MCB suffered a lot.
Govt. Influence
Non-professional and bureaucratic people were placed at the top level mgt who knows
nothing about the banking and they damaged the repute of the bank in the markets a
well
Lack of Dynamism
When the person gets employment in the bank , he hardly leaves the bank. He gets
promotion to higher position and want to do some thing for bank, it is to late because
soon he ha to get retired. So lack at dynamism comes to his personality. He is no
further creative in his life. So increasing age of staff is one of the weakness of the bank
because banks needs young and creative person who have the ability to met the
changing response of the environment .
Advances To Non Productive Units
During the nationalized period, a lot of amounts are forward to non productive unit just
on political basis. The political influence of the Govt hundred the progress of MCB and
most of thee advances are still not recovered and none of them have been written off.
External Environment
Opportunities
Edge over other Commercial Bank
MCB has greater profits, greater growth rate and market share than other commercial
bank.
Privatization
After privatization the banks deposits has accelerated with tremendous speed because
it gave the opportunity to get rid of critical influence and to put the bank on professional
roots
Threats
Private Banks
Like city bank, Grinblays, ABN amroete are entering in the market with greater power
and strength in terms of brand name
Govt. Policies
MCB faces a great threat from Govt policies like as finance the non-productive units,
housing etc. so the bank does not feel freedom in operating on its own view points, that
is a threat for the bank. Because bank is purely commercial so it should have an
autonomy to make its own decisions.
Bank As Tax Collecting Egency
One of the major threat to banking industry as whole I wrong perception of the Govt,
about bankas tax collecting agents. So tax collection on the behalf of the Govt is the
way of hurdle in the efficiency of bank.
Because it is evident that as the Govt, increases the tax on the rupee traveler cheque.(RTC), the sale of cheques goes on decreasing. For examples on the sale of RTC of RS-50000 bank charges only Rs. 20 a its commission and govt changesRs-100 as thence, we come to conclusion that bank as tax collecting agency hinders the bank on commercial working.
Best Analysis
Political factors have a great impact on financial institutions. Banking business
exposal in case of political stability. Like wise political in stability and uncertainty
can adversely affect banking business. For example atomic bomb blast in 1999
resulted in heavily.
With drawl of foreign currency even in one of the branch of MCB. Foreign
reserves reduced from 1 billion to 300 million
Economic and political faders are costly co-related. But economic factors are most
of the times more important then political factors as all type of activities are
directly related with market condition. Boom in market or economy will result in
the expansion of banking business and vice versa. Also the regions with more
investment avenues, the bank will extend more advances and the deposits will be
in banner amount. Whole the areas or regions of MCB where there are banner
invest ional amount of loans.
For example, the amount of deposit in the big city of tarsal abed is banner than of
small city of Chakwal. The reason for such as difference is that Faisalabad have a
great investment avenues in textile industry and a lot of commercial activity. If we
customers like to invest the money in such type of investment events and get loan
for the expension of their business. But opposite is the case with small city of
CHAKWAL.
Social aspects have also a lunge impact on banking business and ultimately on
MCB also if in any society, people belonging to middle class and appears class one
high, banking business can finish. In Pakistan, middle class is biggest. Middle class
prefer to deposit then saving in bank. Upper class which is small in size but big in
financial strength, deposit in bank and also have other investment opportunities in
Pakistan, the literacy note I also very low, so people connect awaid opportunities
of earning the average income level is very les. So banks are not getting any
significant profit from common individual. Because they have to discretion my
income.
In the area of advanced technology MCB is the leading bank of Pakistan with the
initiator of the user of highly advanced technology in its operation I-e online
banking, ATNA service, mobile banking etc these type of technological advances
have resulted in the competitive edge of the bank in over all banking sector and
also has created value and satisfaction for the employs as well as for customer. But
MCB title have to achieve their target of paper less organization in near future.
Future MCBFuture outlook
The year 2001 is expected to pose a tough market environment. Shortage of rains
can seriously impact overall GDP growth. The tight monetary policy is impacting
the credit appetite of the private sector. Slowdown in the US economy will after
the country’s exports with a ripple effect on the manufacturing sector. The
documentation drive, which is good for the country over a longperiod of time, is
being expectantly viewed with concern by certain segments. The combined impact
of these factors may cause a slowdown of economic activity in certain pockets of
the economy.
On the positive side, the resolution of issues in the energy sector, pragmatic
handling of the documentation drive by the government and continuous efforts to
normalize international relations should bring positive results.
MCS is well positioned and flexible enough to operate effectively in the dchanging
scenario. We will continure to broaden our customer base, harnessing the growing
strength of the MCH brand and expand the IT platform to provide value based
propositions to our customers.
Recommendations
MCB does not offer any chances of chances of social gathering for staff. There
should be some informal meeting arrangements to restore the atmosphere of
mutual trust and confidence and to give them respect. Such type of gatherings are
very important to develop an attitude in mind of employees that mgt cane for them.
So employees work with more commitment.
MCB is not currently giving owner ship to employees. It should give certain
percentage of shares to employees to develop a feeling of belonging in them. When
employees own the on. They own its strengths and weal nesses also. So they
readily start working for its progress.
In MCB, there is no culture of encouraging new ideas. Employees should not be
considered on Robots. They have brains of their own. They should be thought to
use the brains on well on hand. Because they one the night people who are as
possible for operations and can give best suggestion.
MCB has uniqueness in their business. But their Differentiator should be in all
fields. Differentiation can be alone in location.
MCB has not built any connection with its customers. For knowing their
suggestions about you services . There should be a proper channel for him. They
can cord net move silvers and savvies and their should have their separately for the
suggestion at completes.
Outcomes of cultural change
Creating marketing value
Perpetuating enhanced level of value creation, for all stakeholders is the basis of
the long-term strategic focus of the Bank. This entails a multi-pronged approach
wherein a series of initiatives should ensure sustained profitable growth via
prudent risk management, introduction of competitively priced new products and
services for customer’s retention and acquisition and reducing the Bank’s
intermediation cost.
Increased financial strength
As the result of coping strategies MCB has now increased it market share from
15% to 18% among 35 national and international banks. This share was 12% just
few years back. MCB has been able to increase its share just because of its
innovative and high quality products and services.
Increased Financial strength
The results for the year 2000 are indicative of sustaining our growing focus
strategies in long-term plans.
Operating Profit (before provisions) has shown a health growth of 58 percent, from
PKR 1.56 billion in 1999 to PKR 2.48 billion in 2000. This was achieved via
managing asset and liability growth at improved margins and aggressively
controlling administrative expenses. Efforts continue to improve the cost to income
ratio enabling the Bank to further strengthen its financial position.
Profit after tax for the year ended December 2000 was PKR 735 million, an
increase of 29 percent over 1999. This is commendable in an environment
characterized by fluctuating money market rates, low commodity prices and
subdued economic activity.
Deposits at December 31,2000 were PKR 136 billion increasing from PKR 130
billion last year. Given the competitive environment, low PLS rates on deposits
due to limited opportunities to deploy funds in the banking sector, and the drain of
deposits in the second half of the year resulting from the documentation drive of
the government, the growth in deposits were satisfactory.
Gross Advances as at December 31,2000 stood at PKR 90.9 billion – an increase
of PKR 19.5 billion or 27 percent. Our Bank continues to follow a prudent,
selective asset acquiring policy and through focused efforts was able to capitalize
on opportunities in a timely manner.
The efforts on recovery were sustained and improved in the year 2000 and the
Bank managed to recover PKR 1.29 Billion (1999-PKR1.29 billion). An
aggressive policy on classification was followed and MCB continues to identify
problem loans up front and take immediate remedial measures.
Competitive EdgeMCB is rightly refardeal as a trend setter bank as its is innovative for most of its
successful products and services and most of the other bank have followed its
scheme and copied its products I-e
Monthly deposit scheme was firstly introduced by MCB and then followed by
other banks. Same is the care with rupee travelers cheques, MCB Mobile.
Banking ,ATM service etc
Currently its most recent innovation is MCB gift cheques which way be co sidereal
as the form of RTC and has proved very Successful and popular on the exert of
Eid.
6.Customer Satisfaction
The world has entered a new era, so has banking. The modern customer wants
excellent service and newer lost effective products at his finger tips. With a
mission to meet customer’s expectations and a vision to be the preferred provider
of financial services, MCB has come a long way. And, with the same enthusiasm
keeps achieving goal after goal, aim after aim.
So, MCB has made its customers satisfied by its continue red focus on product
improvement a innovation.
Employee Satisfaction
By appropriately utilizing the techniques of intrinsic a extrinsic inactivation , MCB has become successful in achieving employees satisfaction .They are more committed towards their institution a are more involved towards their jobs. The major source of thedir satisfaction is the equal opportunity they are having in order to fulfill their career aspirations.
Enhanced image and recognitions by foreign
institutions
A bank which was “priestly said to be “ Dak khana” a very inferior institution is
now an awand winning bank of Pakistan.It has given ceremony award twice. In
2000,euromoney awed was given for benign No.1 in domestic Banks. In 2001, it
has again won the award of “Best Bank in Pakistan “ in the over all banking Sector
including foreign Banks as well.
