Bank mergers and acquisitions in Greece: the financial crisis and its effect on shareholder wealth

Abstract

Purpose

The purpose of this paper is to investigate the wealth implications of bank mergers and acquisitions (M&As) in the unique Greek setting given the triple crisis phenomenon – banking, sovereign debt and economic crises – that prevailed after the global financial crisis.

Design/methodology/approach

The study examines bank M&As and bank transactions over the period from 1997 to 2018, as well as government-assisted M&As during the crisis. The wealth effects of bank M&As are assessed using both univariate and multivariate frameworks.

Findings

Findings show a neutral crisis effect on the valuation of M&As upon their announcement. However, the authors provide conclusive evidence that M&A completions are value-destroying events for acquiring banks during the crisis, far worse than in the pre-crisis period. Greek banks also fail to create value from government-assisted mergers. The results suggest that the financial stability and the prevention of further deepening of the Greek crisis with possible contagion effects were achieved at the expense of shareholders and taxpayers.

Originality/value

To the authors’ knowledge, this is the first study that examines the impact of the Greek triple crisis on the wealth effects of bank M&As and bank transactions. Also, the study provides first evidence with regard to the economic impact of government-assisted M&As in the European context.

Citation

Tampakoudis, I., Nerantzidis, M., Subeniotis, D., Soutsas, A. and Kiosses, N. (2020), "Bank mergers and acquisitions in Greece: the financial crisis and its effect on shareholder wealth", International Journal of Managerial Finance, Vol. 16 No. 2, pp. 273-296. https://doi.org/10.1108/IJMF-02-2019-0080