Mergers and Acquisitions in the Greek Banking Sector: An Event Study of a Proposal

Mergers and Acquisitions have been an important strategy for the Greek banking sector. During the last period of time the importance of M&A in the Greek banking sector have been reinvigorated as a result of a without precedent financial and economic crisis the Greek economy and banking sector faces, and the ongoing pressure both by Greek authorities and foreign institutions (IMF), for bigger and more efficient banks. In this paper the effect of the announcement of an M&A proposal that took place in the summer of 2010, on the share prices of three major Greek banks listed in the Athens Stock Exchange Market, is assessed. The bidder was a private bank (Piraeus Bank), while the targets banks were two state owned banks (Hellenic Postbank and Agricultural Bank of Greece). The event study methodology is used to evaluate the effect the proposal had on the stock returns of the banks involved. Our results are analysed and discussed considering the financial and corporate governance characteristics, of the involved banks and the Greek banking sector.