Bank Rescue and Rationalisation – a Contradictory Failure

Posted by Strangely Freedom Add comments

Nov 032009

RBS and Lloyds’ Banks Carve-Up

Weasel

Call me stupid if you like, but there’s something particularly disturbing about the ethics of the planned carve-up of the big two banks rescued last year by our taxes. (see RBS and Lloyds in major shake-up for details)

Normal Practice During Business Mergers

If two companies merge or one buys out another, quite often they do the same line of business and a major financial attraction of this process is the savings from using common systems – like I.T., accountancy, management, office costs and all the other common costs like these.

They have a fancy word for it – synergy. A usual consequence when departments merge like this is for staff, say 30-50% of them in the affected areas, to lose their jobs

Logic

Logically, if a formerly merged business has to split up, you’d expect the two separate businesses to have to increase these management-al areas to properly run the two businesses?

Q. Yes?

Otherwise one business will not have any I.T. function and the other might not have any office space for management. Things like that. At the very least they’ll need two managers instead of one!!!

Q. Yes?