Managing human resources: bbva bancomer

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MBA Full-time 2003

MANAGING HUMAN RESOURCES
ORGANISATION: BBVA BANCOMER

Module Leader: Dr. Denise Skinner

ERNESTO SANDOVAL
APRIL 28th, 2003

CONTENTS

SECTION PAGE

1. EXECUTIVE SUMMARY. 3
2. BACKGROUND AND CONTEXT 4

3. BUSINESS STRATEGY, CURRENT PERFOR-
MANCE AND THE MANAGEMENT OF PEOPLE. 6

4. CONCLUSIONS AND RECOMMENDATIONS 16

5.REFERENCES. 19

1. EXECUTIVE SUMMARY.

This report is the author’s final assignment for the module ‘Managing Human Resources’ for the 2003 Full time MBA at the Oxford Brookes University Business School. The selected organization is the largest financial group in México: BBVA Bancomer, which was a result of a merger (and later acquisition) of Bancomer (acquired or target bank; the author workedin this organisation 2 years and experienced the beginning of the integration), BBV-México (subsidiary of the acquiring Spanish financial group BBVA) and Banca Promex. This report will undertake a review of the integration process, covering the years 2000, 2001 and 2002. This report will not measure the financial success or failure of the acquisition; the focus is the management of people andits relationship with the corporate strategy and the achieved performance during and after the integration. The core thesis of the research is that there is a strong relationship between the integration’s positive results and the management of people. The research methodology included the collection of secondary data and a review of the literature, covering Internet sites, annual reports,electronic data bases, journals and books. Academic Human Resources Models were applied in order to achieve conclusions and recommendations.

2. BACKGROUND AND ENVIRONMENTAL CONTEXT.

According to Citigroup (Johnson and Alexander, 2003), emerging market countries present growth opportunities, being far from saturated, with 86% of the world’s population and 43% of the world’s purchasing power. In LatinAmerica, size and growth of the population, lower investment cost in banking, potential growth of the region, government support and relaxation of foreign ownership rules ‘paved the way for deep cross-border penetrations into Latin American banking markets’ (Dymski, 2002). The effect of mergers and acquisitions was sharper in Mexico, a country with ‘growth opportunities resulting from the lowpenetration of banking services in the country and its highly transactional character’ (Green, 2003).

Now, the banking consolidation process is over in Mexico. Three large banking groups control 70% of the country’s banking market while six institutions control 90% of the banking industry, with five of these institutions as majority-owned by foreign capital (Green, 2003). The three largest banks(Bancomer, Banamex and Serfin) were bought by foreign investors. Serfin was sold to Santander in May 2000. Bancomer was purchased by BBVA in July 2000, with an offer of approximately $1.4 billion. The new group, BBVA Bancomer, purchased 100% of the shares of Banca Promex, in August 2000. Citigroup took over Banamex in July 2001.

The BBVA Bancomer integration took place in a period with achanging Mexican economy. In 2000, the opposition party putted an end to the 71 years presidential hegemony of the Institutional Revolutionary Party. In both years, interest rates experienced a drop that contracted net interest margins and did not promoted an increase in loan demand.

|Table 2.1 | | | |
||2000 |2001 |2002 |
|GDP increase (decrease) |6.90% |-0.4 |1.10% |
|Inflation |9% |4.4% |5.7% |
|Peso appreciation (depreciation) |3.7% |1.23%...