ABSTRACT
After the mid-1980s and till the 2000s, the Greek financial system has adjusted to the regulatory framework of the European Union. The main characteristic of this period was the liberalisation, the modernisation, and the internationalisation of the banking sector. The effect of changes as well as favourable macroeconomic conditions was an increase in profitability, especially in the 2000s. However, with the start of the crisis, Greek banks experienced significant falls in their profitability. The situation in the Greek banking sector during the years of the crisis was characterised by consolidation process and concentration, worsening of the banks’ financial situation, increasing of Non-Performing Loans (NPLs), the decrease in deposits by domestic enterprises and households, and the parallel increase in loan’s interest rate.
This chapter presents the evolution of the Greek banking sector during the economic crisis, its today’s structure and financial situation according to the CAMELS methodology. The chapter is organised into the following sections. The first section sets out the theoretical underpinnings of the banking consolidation process. It also spells out the motives and factors driving mergers and acquisitions (M&As) and the various methods of consolidation. Trends in M&A activity and the progress in banking consolidation in Greece are detailed in Section 4.2. The impact of the consolidation process on competition in the Greek banking sector and efficiency of the merged entities is analysed in Section 5. The final section briefly sets out the conclusions.
