MERGERS AND ACQUISITIONS IN THE GREEK BANKING SYSTEM. A PROFITABILITY EVALUATION ANALYSIS WITH DUPONT MODEL

Abstract

The unfavorable economic situation, that prevailed in the first five years from the financial crisis that it invaded in Greece in 2010, caused very serious problems regarding the organization of the Greek banking sector. This resulted in the in-depth restructuring of the Greek banking system with acquisitions and mergers in order to create large systemic and crisis-resistant banks, in order to be able to face the looming upcoming profitability problems. The purpose of this study is to evaluate the profitability ratios of the both target and bidder banks that they took place in the wave of acquisitions during the financial crisis and to find out if there is any improvement of profitability to the remained bidder systemic Greek banks. For this reason, we examine and analyze the profitability using the DuPont method three years before the acquisition and three years after the acquisition. Essentially, we study whether the major acquisitions carried out by the Greek systemic banks during the financial crisis had improved their profitability in the short and long term time period. So we describe a general theoretical framework of the DuPont model and the theoretical framework profitability ratios that are part of the DuPont modulus

Keywords:  Banks, Mergers & Acquisitions, Profitability, DuPont Analysis.

JEL Classification: G21, G33, G3.