Comment by V.K. Chin

                  THE restructuring of the banks, finance companies and merchant banks is
                  already a fact and it is pointless to question this. The acquisitions and mergers
                  of these institutions into six groups have to come about to meet the demand of
                  the World Trade Organisation.

                  The WTO wants this sector to be liberalised and a target dateline has been set
                  which must be met or else member-governments will have to face the
                  consequences.

                  So whoever is in charge of the finance ministry will have to accept this situation.
                  Since there is not much time left for the exercise to be completed, the
                  Government has to step.

                  The banks, finance companies and merchant banks have little to complain
                  about as they have known about this policy for a long time. Government leaders
                  and Bank Negara Malaysia have told the shareholders of these companies that
                  it is better for them to discuss such mergers among themselves.

                  Unfortunately, this warning has not been heeded and so the Government is
                  forced to set the timetable for them to be grouped into six anchor banks in order
                  to comply with the WTO requirements.

                  Those involved will want to know the criteria used as to why certain banks were
                  given the privilege as the acquirers and also why there should be only six of
                  them. If given the freedom to decide, it is unlikely that there can be a
                  consensus on these issues. A firm hand is needed in this matter or else things
                  will just continue to simmer.

                  In the restructuring of the industry, the main concern is the fate of the
                  thousands of workers in the institutions which are to be acquired. In such a
                  massive exercise, retrenchments cannot be avoided. Such lay-offs will however
                  not be confined to only a certain category of workers but will affect all members
                  of the organisations. In the banking sector for example, there will be 15
                  redundant chief executive officers who will be laid-off.

                  At the same time, all the senior management staff, including executive
                  directors, general managers and managers, who will not be absorbed on
                  completion of the mergers and acquisitions will also have to go.

                  The same is true in the finance companies and the merchant banks as many of
                  the employees of all ranks will most probably be axed. It will be difficult to
                  accommodate the CEOs, the executive directors, the financial controllers as
                  the acquiring banks will already have such senior management personnel in
                  place. It is impossible for the acquiring banks to absorb all the employees of
                  the acquired institutions unless the senior managers involved are prepared to
                  accept a lower position in the new organisations.

                  Many of course are not prepared to do this and under the circumstances they
                  will have no alternative except to quit. The important consideration is that they
                  must be given a good package which will at least ease the pain of losing their
                  jobs.

                  While many announcements have been made about the acquisitions and
                  mergers, it will take a while for the companies to work out all the details
                  involved in such a complicated task.