Category Archives: M & A

Greek Banks in the Balkans: the big crunch

Ms. Athanasia Dimitriadou, M.B.A. Student – Specialization in Finance

Dr. Periklis Gogas, Associate Professor

Department of Economics

 

Democritus University of Thrace

Mergers and acquisitions are often used as a means of bank expansion both nationally and even more so internationally. Greece joined the EMU in 1999 and was in the first group of EU countries that abandoned their national currencies and adopted the euro in its physical form in 2002. From that point on the Greek banking sector became an integral part of the European monetary and economic union. There were multiple benefits from this integration. On the top of the list was the stability that was guaranteed by the European Central Bank (ECB) and its supervision mechanisms. This stability and the related risk minimization was reflected in the low financing costs of the European banks in general and Greek banks specifically. This fact significantly widened the spread between lending and deposit rates for Greek financial institutions so that profit margins increased. These margins were sufficiently large that Greek banks did not need to invest (at least not greatly) in financial instruments such as Asset Backed Securities (ABS) or other derivative financial instruments that appeared to have high yields. After the crash in the markets were these assets were traded they became widely known as “toxic bonds”.

Greek banks did not have a high exposure to these bonds as they found an alternative source of high revenues: the expansion to neighboring countries in the Balkans. These emerging economies started their financial liberalization process and opened their financial sector to international investors. In Table 1 below we report the most important investments of Greek banks in the Balkans before the Greek Debt Crisis. The five major Greek banks were very active in investing in the Balkans. These were more specifically: the National Bank of Greece, Eurobank, Piraeus Bank, ATE Bank and Alpha Bank. In the first column of Table 1, we present the Greek bank that invested in the Balkans, in the second column we report the acquired foreign bank, in the third column we report the country of the acquired bank and in the final column the percentage stake of participation. In all, fifteen banks were acquired in total or in a major stake by the five systemic Greek banks.

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1 in 3 Companies Constrained by Corruption

jim-kimBy Dr. JimYong KimM.D., Ph.D. is the President of the World Bank Group. Soon after he became president in July 2012, the organization established two goals: ending extreme poverty by 2030 and boosting shared prosperity for the bottom 40 percent of the population in developing countries. Kim’s career has been focused on health, education, and delivering services to the poor.

Approximately one in three companies around the world identify corruption as a major constraint to operating their business. We can and must do much more to combat corruption. It poses an enormous obstacle to the global goal of ending extreme poverty, denying resources to the poor and undermining the delivery of services to the vulnerable. 

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Actions Immediately after Closing the Acquisition Deal

drjohn11aBy Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com,  Founder and former CEO, JP Industries, Inc., a Fortune 500 industrial corporation

This is the 16th and last of a Series of  short articles on “HOW TO BUY THE RIGHT COMPANY”  that have been posted herein.

Once you close the deal, you need to be prepared to go in the very next morning to meet with your management team as well as your entire staff.

What you do in the first days and weeks will set the tone for your relationship with your employees for some time to come, possibly even the duration of your ownership.

Remember that the chief concerns of your employees and managers may be somewhat different than your own agenda. Employees will be concerned, first and foremost about their own job security and future with the company now that it is under new ownership.

Management shares this concern, and may also have more narrow issues facing them in their own departments, that nevertheless they may feel requires immediate attention.

An easy model to follow includes a short initial introductory meeting with management, an all-employee meeting to include all management and non-management staff, and then a third more formal meeting with management.

These meetings will set in motion the planning to carry out the three objectives of the transition: addressing your key constituencies (employees, customers, suppliers and bankers), revision of the action plan, and implementation of significant changes outlined in the plan.

Other meetings will follow in the first days and weeks, but it is essential to try to fit these first three meetings into the first day if at all possible.

As a new owner, you must be careful to listen carefully, building trust and goodwill with your new employees.

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