GREEK BANKING SECTOR IN THE ECONOMIC CRISIS AND M&As AS A SOLUTION

Greek banking sector in the economic crisis This study examines the impact of thirteen mergers and acquisitions in the Greek banking sector which took place during the period of economic crisis: 2008-2014. More specifically, the sample of this study consists of all the mergers and acquisitions that led to the four remaining Greek banks (the acquirers of the above-mentioned transactions) which are: National Bank of Greece, Piraeus Bank, Eurobank and Alpha Bank. These specific banks were chosen due to the fact that after the M&As transactions we were able to compare their financial data. This comparison was made by using eight ratios for statistical tests one-year pre- and post-merger. The results of the study indicate statistically significant improvement in three capital structure and viability ratios, as well as a slight improvement on a liquidity ratio, while there is statistically insignificant change or no improvement on the profitability and efficiency ratios. In conclusion, there was some improvement in terms of capital adequacy and loan structure as far as the total capital employed of the merged institutions is concerned, but without improving the profitability of the banks during the economic crisis in Greece.


INTRODUCTION
It is a fact that the structure of the banking industry has changed, both at an international level, and in the Greek market, due to mergers and acquisitions, a phenomenon quite old and widespread in foreign countries ( From this period onwards, foreign investments started to occur in the country, most of which were realized through acquisitions and mergers (Thanou & Daskalakis, 2013;Kyriazopoulos & Drymbetas, 2015).
The shifting of the banking market's regulatory framework on one hand, and the smaller players'such as EFG Eurobank and Piraeus Bank -claim for a larger share of the domestic market, on the other, put significant pressure on the larger and more traditional banks, such as National Bank of Greece and Alpha Bank. As a result, the latter ones were compelled to face and adjust to this new reality, by proceeding either with their own acquisitions, their technological upgrading or employee learning practices ( Georgantopoulos & Filos, 2017). Thus, the Greek government in 2009 started a mechanism (called as 'support mechanism'), which was created from the IMF -International Monetary Fund, the EE -European Union and the ECB -European Central Bank. However, the historical changes in the Greek banking system began in 2012 and continue during the economic crisis, resulting in multiple negative effects, especially in the business performance of Greek banking companies (Sompolos & Mavri, 2018).
Thus, the purpose of this study is to analyse the changes realized by each bank, from 2008 until today. More specifically, a comprehensive reference to all the acquisitions and mergers that took place in each of the four existing systemic banks (National Bank of Greece, Piraeus Bank, Eurobank and Alpha Bank) will be demonstrated, alongside parallel historical reports that played an important role in each bank's progress and achievement of systemic stability. The results revealed that M&As have a partial positive impact on the post-merger performance of the four examined banks.
Based on the above, the structure of this paper is as follows: (a) the following section provides an analysis of the relevant literature; (b) subsequently, the research methodology module, presents the survey sample to be investigated, the ratiosquantitative variables of the research, and the methodology-testing of the sample's hypothesis; (c) then, the results are analysed (research and discussion of the results obtained, in comparison with the relevant literature), and; (d) finally, the paper is completed with specific concluding remarks, as derived from the data analysis and the applied methodology, and suggestions for future research.

LITERATURE REVIEW
This section presents the analysis of the relevant literature, concerning mergers in the banking industry, both in Greece and internationally.
A study for a developing market that employs analysis's financial statements to determine the impact on profitability, leveraged acquisitions, and shareholders' wealth with computation of several ratios was carried out by Omoye and Aniefor (2016), which focused on the M&As of the Nigerian economic environment. The financial ratios they examined, are divided into three categories: (a) Profitability ratios: return on equity (ROE), return on capital employed (ROCE), return on asset margin (ROAM), net profit margin, gross profit margin, interest paid to total deposit; (b) Investment ratios: earnings per share (EPS), dividend per share (DPS), price earnings ratio, dividend payout ratio, dividend yield, earnings yield; (c) Leveraging ratios-debt ratios: total debt to shareholders ratios, long term debt to shareholders funds, gearing ratio, fixed interest cover, proprietary ratio, fixed dividend cover. The statistical method used was the McNemar test, and the time period involved three years before and after the merger. The results of the study showed that the above ratios were positively influenced by M&As, and led the authors to the conclusion that M&As can induce the economic development of a nation.
The banking industry of Nigeria was also examined by Yusuf and Sheidu (2015). More specifically, they investigated the potential improvement in the ROE ratio, following the numerous mergers and acquisitions that took place in the Nigerian banking industry, during the period 2004-2005. This study compares the mean ROEs before and after the merger of 25 banking establishments. The research data was collected from the banks' annual financial reports, in order to calculate the mean ROE ratio of those banks, within the study time period. The methodology used included statistical tests, such as: chow structural break tests, paired sample t-tests, independent sample t-statistics. The results of their study suggest that M&As in the banking industry do not improve the ROE ratios of the banks involved, and the researchers conclude that mergers lead to insignificant or zero improvement in the financial performance of the banks. Based on these findings, the authors advice participants in upcoming bank mergers to be prepared to "be disappointed", as any optimistic expectations before the merger, prove, more often, unrealistic. Finally, they encourage the pursuit of other strategies to prevent the unsatisfactory functioning of these establishments.
For the Greek market, Kyriazopoulos and Drymbetas (2015) studied the long-term impact on profitability and efficiency of various banks, following M&As. Their research utilized a sample of 118 domestic banking agreements, from 1996 to 2010, to test their performance using profitability and loan quality ratios. The results of their research indicate that, while, initially, M&As affected negatively the profitability of banks, after the third year following the realization of the M&A, the profitability of the merged banks appeared to improve slightly. Furthermore, the results vary, regarding the efficiency ratios. The analysis of empirical evidence reveals a general expansionary policy of the acquired banks, two or three years after the M&As, but the results did not indicate a clear trend. The same applies to the fluctuation in the share price of the merged banks, which does not lead to a conclusion concerning a profit yield, two years after the merger.
Furthermore, Ayako, Musyoki, and Kanwal (2015) analysed the performance of Nairobi commercial banks, during the period from 2001 to 2014, using the paired t-test statistical method and trend analysis of the ROA (Return on Assets) and ROE ratios (Return on Equity), on a sample of 46 banks. The results, which are consistent with several previous studies, indicate that mergers increase the value of the company only in the long-term, demonstrating positive outcomes usually three years after the merger. These advantages generally signify a fluctuation trend, which, initially, appears downward, but begins to ascend at about three years after the announcement of the merger. Moreover, the benefits were higher for the ROE ratio, compared to the ROA. Finally, the merged banks did not perform better at the ROE and ROA ratios at first, since their mean scores were significantly lower than the average values of the banking industry. Based on the paired t-test scores, at a significance level of 0.01 and 0.05, the authors conclude that the performance of commercial banks after the merger did not exceed that of the banking industry in Kenya.
According to Haider, Shoaib, and Kanwal (2015), bank mergers are not corporate decisions that improve the performance of the involved banks. They examined the impact of mergers on the profitability of banks in Pakistan and they reviewed a sample of six banks, three years before and after the merger. Their analysis was based on the paired ttest statistical method, and regression results showed a negligible impact on bank performance, while the t-test indicated that the performance of each acquiring bank did not improve significantly after the merger, regarding issues of liquidity, profitability, leverage, capital adequacy, and size.
Another survey that examined the impact of M&As, this time in Nigeria's banking industry, is that of Eferakeya and Alagba (2015), which showed that the financial performance of banks deteriorated after M&As and became riskier in terms of profitability, liquidity, and some other performance indicators, in a sample of nineteen banks. This outcome was also confirmed by the t-test results, which demonstrated that there was no statistically significant improvement in these ratios. The study concludes that the merging companies should, firstly, comprehend the economic conditions that prevail, before deciding on mergers.
The banking industry of Greece was also examined by Pazarskis et al. (2014) who analysed the impact of bank mergers and acquisitions on the performance of Greek banks, through an accounting approach. More specifically, they investigate the performance of seven banks, listed on the Athens Stock Exchange, using accounting data (19 financial ratios, suitable for banks and financial corporations) for the period between 2004 and 2007. The operating performance of banks is estimated for three, two and one years, before and after the merger or acquisition. The results indicate that mergers provide better financial returns for the acquiring banks. These exclude the dividend policy of each bank, which must be quite conservative, due to the global economic crisis. Additionally, the effect of mergers and acquisitions in the financial performance of Greek banks is not direct but becomes evident within the next two years. The researchers, therefore, come to the conclusion that the impact of the M&As on the sample is positive, and, in fact, grows, parallel to the expansion of the control interval.
For the US market, Lin et al. (2014) examined how the capacity of human resources of a company can influence the development and effectiveness of strategic corporation mergers and acquisitions. In the context of their research, M&As are considered to be a long-term strategic orientation, based on the strengths of human resources, rather than a tactic for achieving short-term goals. Using a sample of 267 US banking companies, they investigate the main impacts and interaction between the M&As intensity and the capacity of human resources, in four performance indicators. The findings confirm that banking M&As can prove very effective, in cases where the bank has a high human resource capacity that has a direct impact on the company's performance.
In their study, Achua and Ola (2013) attempted to fill the gaps of previous studies concerning the Nigerian banking industry, which, either due to insufficient sample or due to methodological problems, led to conflicting conclusions. They provide information on the effects of the recapitalization strategy through M&As of the Nigerian banking industry, in terms of profitability, liquidity, leverage and profit volatility. The results of their study indicate that there is no significant improvement in the economic performance of the Nigerian banking industry, following M&As, which may be due to the fact that these actions were mandatory and the market did not demonstrate sufficient liquidity, or because they had to be implemented within a very short period of time, responsibility of which may partially lie with the political leadership that led to such decisions.
The role of strategic similarities in achieving improved post-merger performance was examined by Thanou and Daskalakis (2013) in the Greek banking industry. They describe developments in this area over the past two decades and study the impact of various strategic features on the economic performance, after the merger of fourteen out of the twenty-three M&As that took place over the period 1997-2007. In their analysis, they utilize the model proposed by Altunbas and Ibanez (2004), using the difference between ROE after the acquisition and the weighted average ROE of the merged banks two years before the merger, as a dependent variable.
Due to the small sample size, and the fact that their analysis is limited to domestic mergers, they don't rely solely on the results of the regression, but also use descriptive statistics to obtain further information from their data. Then, they analyse the economic characteristics of successful mergers, as compared to those of failed ones, in terms of change in performance, both descriptively and with regression. The results show that different liquidation strategies between the acquiring and the acquired banks led to synergies, which are associated with a positive performance. Another important finding is that similarities in the cost structure of the merging establishments contribute to the success of the merger. Finally, there is also evidence indicating that the larger the size of the acquired, in relation to the acquiring bank, the lower the return, following the merger, a fact which suggests that the practical difficulties and costs involved in the merging of two establishments of the same size cannot be easily overcome.
Regarding the Romanian banking industry, Huian (2012) tried to determine the effects of M&As on Romanian banks. She studied twenty transactions (two mergers and ten acquisitions) that took place between 1998 and 2008. In her work, she evaluated the performance of banks, in terms of profitability, drawing information from the annual financial statements for three years after each transaction, starting from the year immediately following the M&A. The study recognizes the 2007 financial crisis and, therefore, divides the sample into two subgroups, one before and one after 2007, each of which includes 6 transactions. The findings of the study are contradictory. On the one hand, the ROE and ROA ratios show no improvement, but, rather deterioration, and on the other, the mean NIM (Net Interest Margin) appears to be above the average NIM of the Romanian banking industry.
Another study which deals with employee productivity, as well as the operational productivity of the banking industry, is that of Akhil (2012), and concerns the banking industry in India. The study examined the effects of bank mergers, from 1999 to 2011. The year that the merger was realized, was used as the base year, and a two-year time-period, before and after that, was examined, utilizing the paired t-test for the analysis. The results showed significant improvement, both in the labour productivity ratios and in the branch productivity ratios. This was mainly due to the voluntary retirement schemes carried out by the banks in order to reduce the number of employees. Furthermore, the increase in the industry's productivity might also have derived from the transfer of technology, between the acquired and the acquiring bank and vice versa. Akhil (2012) presumes that, due to the positive correlation between labour productivity and profitability, an increase in labour productivity would release the synergies of mergers and acquisitions.
In the Greek banking industry, the impact of Μ&As on employee performance was examined by Liargovas and Repousis (2011). Using four economic ratios, they obtain contradictory results regarding employee performance, during the post-merger period in the Greek banking industry. The results were as expected since the M&As represent a dilemma that disorients employees, as it may have a positive, but also a negative influence on their performance. Such dilemmas cause anxiety and stress to the employees, due to the review and reevaluation of their position. On the other hand, they could possibly urge employees to seek new learning practices that may help those working in the merged banks adopt a more creative mind-set and practice. According to this study, there is no evidence to suggest that employee performance improved after M&As since it appeared lower than that of nonmerging banks. An improvement in employee performance can be achieved through transformative learning, if the human resources departments of banks become aware of, and adopt such practices.
Regarding the pros and cons of bank mergers, Kyriazopoulos and Petropoulos (2010) attempted to distinguish the advantages and disadvantages of banks deriving from M&As, as well as to explain the causes and incentives that prompt banks to merge and achieve possible surplus values following the merger. Using the Altman's Z-Score Model-based methodology, they review two major mergers that took place in Greek banks, the EFG Eurobank's acquisition of Ergasias Bank (2000), and the merger between Marfin Bank and Egnatia Bank (2007). Examining the above cases, they sought to discover whether the M&As had provided an improved position of the created from mergers banks according to Altman's Z-Score Model. Furthermore, they analysed a sample of the largest Greek banks that merged with or acquired other smaller Greek or Balkan banks, using the same model. According to the conclusions of this study, all Greek banks operated in a problematic area, mainly because they presented a low market value of equity and a high book value of total liabilities. We note that the low rating of Greek banks, according to the Altman's Z-Score Model, persists, even after the M&As with other small banks in Greece and the Balkans. A classic example of such a bank is EFG Eurobank. The major Greek banks are also aware of this problem, and thus resort to M&As, seeking a solution. Hence, the authors conclude that only three or four banks should remain in the Greek banking market, in order for them to be capable of competing with the European banks.
For the Indian market, Ravichandran, Mat-Nor, and Mohn-Said (2010) attempted to analyse the parameters that affect bank performance, before and after the merger. For their analysis they used the CRAMEL model (containing the following data: Capital adequacy, Resource raising ability, Asset quality, Management and systems evaluation, Earning potential, Liquidity/asset liability management) on the selected private and public banks, with the regression method, as well as a factor analysis, to identify the important variables in the CRAMEL model, such as, increases in assets and in profit margins, which affect significantly the performance of merged banks, before and after the merger. The sample they utilized consisted of 7 bank mergers of Indian banks, and the data for the survey were collected from the annual financial statements of these 7 banks, during the period 2000 to 2007. The results of the analysis indicate that mergers did not appear to improve the performance of banks, as no significant difference was observed. The economic performance suggests that banks focus on retail banking and that the main reason for the merger is to enhance their services in retail banking. Finally, the company's profitability is significantly affected, presenting a negative impact on earnings.
Last, as a case study with ratios' analysis, Maditinos et al. (2009) study the results of the merger between two banks (Pisteos Bank and Ionian Laiki Bank), which was actualized in 1999, and the resulting establishment was Alpha Bank. The study is divided into two parts. The first part, examines the short-term effects of the merger, through the analysis of the bank share value (which seems to improve in the short term), while the second part deals with the long-term effects, using ratios to examine the relative position of Alpha Bank in the industry. The analysis of the ratios illustrated that the merger of the two banks not only led to positive outcomes, but it also rendered the new, emerging bank, highly competitive in the Greek banking market.

Sample
The sample of companies that advanced to bank mergers or acquisitions consists of several Greek banks which made bank mergers or acquisitions during the 2008-2014 period and it relates to transactions with other banks or with companies that had financial activities. For these banks, we selected the M&As transactions for which it was possible to compare the financial data before and after the M&As transaction and without any other similar transactions being carried out at that time. The merger announcements and the annual reports have been found on the web site of the Athens Exchange. The quantitative variables of the study (accounting ratios) have been calculated from the financial statements of the merger-involved banks or other online information provided by each bank. The four banks examined are the following, while the table below presents for them each M&As transaction: (a) National Bank of Greece; (b) Piraeus Bank; (c) Eurobank; (d) Alpha Bank.

Ratios-quantitative variables
It is possible to extract financial ratios (with several utilities) by analysing the financial statements of the acquiring companies (before and after the merger or acquisition). When data of past years are compared to similar data of previous years we reach to more interesting conclusions. For the purpose of this study, the ratios chosen (VAR_1-VAR_4) for the analysis and evaluation of the above sample are in accordance with the methodologies followed at

Methodology
The purpose of the present research is to determine whether each bank improves or deteriorates its position after the M&As transaction by comparing the respective time period before the M&As transaction. The use of the above mentioned ratios assists in observing their performance change pattern (Akhil, (Healy, Palepu, & Ruback, 1992), while the selected ratios are calculated for all the sample companies during the period of the year before (year t -1) or the year after (year t + 1) the M&As transactions and the mean from the sum of each ratio for the (t -1) years is compared to the respective mean from the sum of the (t + 1) years, respectively. In this study, the mean from the sum of each financial ratio is computed than the median, as this could lead to more accurate research results, and this argument is consistent with many other researchers (Neely & Rochester, 1987;. It is also important to note that we did not include in the study the comparison of the ratios of the year that the M&As transactions occur (t = 0), as during this period some one-off events happen, such as the financial cost of implementing the M&As transactions that contribute to the formation of merger event. Finally, in order to assess our data and to apply the above-mentioned methodology, two independent sample mean t-tests are applied to the ratios of the sample companies before the merger (Pre-Merger) and after the merger transaction (Post-Merger).

RESULTS
Descriptive statistics of the data (before and after the M&As' events) are presented in the next two tables.  Next, the results of the study presented at the following table revealed that four of the eight examined ratios are statistically significant, which is signalising a different accounting performance in the post-merger period for the examined banks than this before the merger. More specifically, these ratios outperformed after the bank mergers. Firstly, the problem of banks' efficiency on capital structure and viability ratios, regarding the capacity of equity to total assets, net loans and liabilities (VAR_1-VAR_3, respectively) seems to have an improvement during the post-merger period. The ratios VAR_1-VAR_3 that measures the equity to total assets, equity to net loans and equity to liabilities, respectively, are statistically significant (p < 0.05) and is associated with the likelihood of increased capital adequacy and loan structure, as it is provided from their financial statements. Secondly, regarding the category of liquidity ratios, one of the two examined ratios, the VAR_8, improved statistically significant (p < 0.1) as well. The VAR_8 that compute the size of net loans in relation to total assets provide also an improvement of the loan size to capital adequacy. Last, in the category of the profitability ratios, none of the three examined profitability ratios presents a statistically significant changed. Thus, the banks M&As do not improve their profitability during the economic crisis in Greece.

CONCLUSIONS
During the economic crisis period in Greece, the strategic moves that began after 2010 concerning the Greek banking system and that continue up to this date have influenced in various ways the business performance of the Greek banking institutions. That influence created the need for further investigation of the aforementioned results. Hence, as a sample of companies that proceeded in merger and acquisition transactions, we have selected various Greek banks that gave effect to a merger or an acquisition transaction during the time period from 2008 to 2014. The four banks that we examined are the following: National Bank of Greece, Piraeus Bank, Euro bank and Alpha Bank. For these banks, we selected the M&As transactions for which it was possible to compare the financial data before and after the transactions. the comparison was made by studying eight ratios (equity to total assets, equity to net loans, equity to liabilities, net interest margin, return on equity, return on assets, interbank ratio, net loans to total assets) and by applying two independent sample mean t-tests.
The results show some improvement of four of the ratios: equity to total assets, equity to net loans, equity to liabilities and net loans to total assets, while it does not show a statistically significant change of the four other ratios (net interest margin, return on equity, return on assets, interbank ratio). In other words, we notice some improvement in capital adequacy and loan structure in relation to the total capital employed of the merging banks during the financial crisis, but with no statistically significant increase of their profitability, as shown in our results.
The following limitations have been taken into account when implementing this study. First, the methodology and the selection of the financial ratios used in this research are in accordance with the methodologies followed at several previous studies Last, the results of this study could be useful for accounting research for the banks' examination after mergers during a period of economic crisis. Also, different research samples could be compared with banks involved in international bank merger activities (if there are) or within different time intervals, as it would also be useful to further investigate the influence of the same actions for a longer period of time in order to ascertain the longterm effects of these transactions. The research results that present recent empirical evidence from Greek bank mergers during the economic crisis could be useful for governmental policy issues examined from tax and other state authorities, managers or investors for a potential investment in Greece.