Ewan Stirling, CEO, HSBC Bank Oman speaks about the integration process of HSBC and Oman International Bank in a candid interview with Mayank Singh.

Now that the HSBC-Oman International Bank (OIB) merger has been formalised, what are the top three priorities for you as the CEO of the new bank? 
It’s really hard to list a set of priorities; but always you have to be led by your responsibilities and our top responsibility is towards our staff and our customers. Without a doubt, happy staff means happy customers, happy customers means good business and this is good for the country. We are very focused on what we should be providing to our staff and customers in terms of everything – the terms and conditions, business opportunities and other propositions. It is very important for us that our primary stakeholders who are our customers and staff really enjoy the benefits of this merger as soon as they possibly can. Leading from that is the second part which is the integration process.

We have set up a very challenging timeline to complete the integration, as you know the merger was completed on May 31, 2012, when we had the OGM appointing the current Board of HSBC Bank Oman and we intend to complete the technical integration, to have one operating platform, common systems across the whole bank and the branch network by December 2012. We hope that by December, customers should be able to see the HSBC Bank Oman branding across all the branches in the Sultanate, and wherever you see this branding you will get the whole proposition on a combined platform. The third priority is business growth and that is not selfish as we have a duty to our shareholders. We should not forget that while HSBC owns the majority of the shares at 51 per cent, we have a duty towards 49 per cent of our local Omani stakeholders.

We also have a responsibility to the Omani banking sector, as we are the second largest bank and it is vital that we contribute to the growth of the banking sector. We are in a unique position with HSBC Bank Oman and we are delighted to be in this banking sector as a local bank now. We are here to provide an alternative to the other banks in the market and also to cooperate with them on larger deals that no bank would like to take on exclusively.

While we are a true local bank, unlike any other local bank, we can also provide a window to the world for Oman. We can bring the best of financial services from wherever we operate into Oman and ensure that we are an ambassador for Oman wherever HSBC operates. We see ourselves as not only focusing on business growth here for our shareholders but also on business growth for Oman as we are going to promote international trade into Oman from all the 85 countries where HSBC operates. We feel that we will be playing a serious role in connecting Oman internationally.

What are the potential synergies of the merged entity in terms of larger capital base and networth. Will HSBC Bank Oman participate in large project financing deals and can we look forward to cross border deals under HSBC Group umbrella?
When you look at a larger capital base, it gives us the ability to help more companies in Oman, which we will leverage, but frankly that is not the prime motivator for HSBC Bank Oman. We have a tremendous distribution network that allows us to garner local funding and which puts us on a level playing field with BankMuscat and NBO. There is much more than that, HSBC has been in Oman since 1947 and we have been integral to the banking community. But frankly HSBC had a six-branch network and it was not able to bring the benefits that we have internationally into Oman completely. Then we look at OIB and what a legacy they have had. If you put HSBC’s international experience along with OIB’s legacy and proven track record, that has to be a winning combination for all stakeholders, customers, staff and the community.

How would HSBC use the current network of OIB branches? Are there any plans to rationalise the branch network?
On the integration side, we are on a tight schedule as we want to be on one platform and one offer by December 2012. Customers should be able to walk into any of our branches by December and enjoy the full proposition in terms of customer service and product offerings which are seamlessly linked across our entire branch network. During that period, we will also have a fairly comprehensive refurbishment plan. That’s not to say that all the branches will be refurbished, as a number of OIB branches are already in a fantastic shape right now under their own refurbishment programme, but we will look at those branches which have not been on the top of that list. We have already given some branches a new coat of paint, in preparation for the full refurbishment. There is a quite comprehensive branch network strategy being developed.

Will the existing products of OIB and HSBC be retained or rebranded and how will the process work till December 2012?
Frankly, customers need not do anything as of now. Former OIB customers can continue to enjoy all the services that they used to enjoy at OIB before the integration and the same goes for HSBC customers. For people having an account in both the banks, they can continue operating both their accounts. Once the integration is complete, then customers will be given a choice of either continuing with both the accounts or merge both the accounts, with the same signing authority. I would like to request all our customers both at OIB and HSBC to come to us and update their details, so that we can get in touch with them and advise them properly about all the things that are going on and explain to them the various benefits that we offer.

We want to offer the best products for the local market and the best of international products and services, so we are looking at our portfolio very closely. The question that I get asked most often nowadays is – what will happen to Mandoos, as it remains a favourite. We are not likely to discontinue something that our customers like and want, so probably you will see Mandoos being continued in an enhanced form. We will look at all our products and see that we are offering the best value to our clients. There will be some rationalisation as we are not going to offer two versions of the same loan – as OIB and HSBC did, it will be the HSBC Bank Oman loan proposition only and that will be the best of both worlds.

HSBC has a strong Islamic Finance service under the Amanah brand. Are there plans of introducing Islamic product and services in Oman under the Amanah Brand?
As you know we are very quick to react, but we are also very respectful of local regulations. We would prefer to wait and see what the local regulations that the Central Bank of Oman and other regulators advise us on so that we can react appropriately.

HSBC operates on strict global practices in terms of risk and lending. Will the application of such stringent standards impede growth in the local market?
It is not going to restrict growth and it is not going to restrict anything that our customers want, but I do not want to mislead you. If you look at HSBC, we have grown very effectively, and our lending policies have not restricted our growth in anyway. Definitely there are differences amongst all the banks and I would like to draw your attention to trade finance. We are a trade finance bank, it is our bread and butter and that’s where we have grown in Asia and the Middle East. If you look at our trade finance share in Oman before the merger, it was significantly higher than our overall market share. You will not see HSBC massively changing its policies and procedures, but what you will see are policies and procedures that safeguard the bank, safeguard the banking sector and allow us to grow and best serve our customer needs.

The bank will be incurring higher expenses towards up-gradation of systems and process, infrastructure etc. What impact will this have on your cost to income ratios?
As a listed entity, I am not allowed to comment on any forward looking statements, but as you mentioned there will be a cost for the integration process and that is one of the reasons why we want to achieve that as fast as possible and then drive our business forward. We have a very robust plan approved by our board and which will show a very robust performance in the years to come.

Can one expect HSBC Bank Oman to be more aggressive on the investment banking side after the merger?
Given our status and size as a local bank, you will see a lot of more activities as we will be looking at participating in all the infrastructure projects and big ticket items both in terms of funding and in terms of advisory work. The way in which we deliver will not change markedly as we have world leading teams, who have garnered a succession of awards in corporate advisory, equity analysis and security services and we will continue calling on their services. We will have a much larger team on the ground to deal with what we hope will be a much larger business.

Whenever two established entities merge, there is a risk of the culture of the two organisations clashing. Is this a concern area?
I would like to make two points regarding this: I don’t think that there is much of a cultural difference. I have seen and heard from many of our staff from OIB that they were former employees of British Bank of the Middle East. If you look at OIB and your readers would recognise this, it is a conservative, traditional bank with very high standards of excellence, and it is exactly the same with HSBC. There is no culture clash also because these are two entities that know each other very well. For example, OIB purchased 12 of our branches and a number of those staff are still with us. One of OIB’s former general managers HE Yahya Al Jabri was HSBC’s branch manager in Nizwa and he rose to be the general manager of OIB and we both know him as the regulator running the Capital Market Authority before he became the chairman of the Special Economic Zone Authority at Duqm (SEZAD). This merger is not new but history repeating itself.

The second point is that how different can cultures be anyway in banking. It is an incredibly responsible industry where we are looking after the future of our customers. In terms of retail, we are allowing them to invest for their families or look after their savings. On the corporate banking side, we are allowing companies to grow and that is a national service. So the culture won’t be dissimilar.

HSBC has very strong values that are well recognised. Our leading value is courageous integrity and that’s knowing when to do the right thing and having no fear in doing the right thing. I believe that this is a universal value and I have seen that my new colleagues share the same. We break this value into three things – being very open, so we have an open management style, and we allow people to speak up and we expect them to do so, without fear. Secondly, we believe ourselves to be connected – not just being connected internationally, but being connected with our customers, regulators and staff, and finally we are dependable. For HSBC and OIB, we are going to do something we tend to do. We are focused on things that we have said we will be doing and a culture clash is not something that I will be losing my sleep over.