A case study from the Greek banking sector: PROFILE OF THE BANK UNDER STUDY

The bank under study which was established in 1993 is ultimately part of a Geneva-based financial group, while 10 per cent of shares are held by the largest German Bank and the remaining 46 per cent represent its ‘free float’, which is largely held by around 400,000 individual shareholders in Greece.

During the last five years, the bank, driven by Greece’s progress towards European Monetary Union and the development of the Greek market, has pursued a strategy of rapid growth. As a result, it has been one of the fastest growing banks and the second largest private bank in the highly competitive Greek financial services market. As in many European countries, major shifts have occurred within the Greek banking sector over the last decade (eg the deregulation of activities such as consumer and business credit). In addition, many traditional state-owned financial institutions are now privatised. The increased competition and concentration that have taken place through mergers and acquisitions have also transformed the industry’s structure. At the moment, more than 25 domestic and foreign banks operate in Greece with the largest four (among which is the bank under study) controlling more than 80 per cent of the market in terms of market share.

The bank has a strong position both in the B2C and private banking markets. It is considered one of the banks with the most innovative product ranges, including savings/investment accounts, credit cards, mortgage and business loans, and mutual funds, to name just a few.

In addition, there has been a dramatic increase in the bank’s branches, from five in 1993 to 350 in 2001, employing approximately 7,500 people. This increase in the number of both the bank’s branches and employees has successfully been achieved through a combination of dynamic organic growth and selective mergers and acquisitions (acquisition of three other banks, merger with two other banks). The bank has also taken pioneering steps in the development of alternative networks for the provision of products and services, essentially through the Internet.

Furthermore, the bank has an increasing presence with multifaceted operations in the neighbouring southeastern European countries (Bulgaria, Romania), while its short-term plans include extending its operations in other countries in the region.

In terms of size and performance, the bank under study is:

—   the third largest banking group in Greece

—   the second largest privately owned banking group (by total assets-C15bn)

—   the third largest market cap on the Athens Stock Exchange

—   rated A3 by Moody’s, financial strength C — the highest in Greece (rating is for the combined group)

Finally, a fundamental characteristic of the bank under study is that its organisational structure is based on the product management system. By and large, the company’s services are divided into four large categories: the retail banking sector, the corporate banking sector, the investment sector and the operations sector. Each of these sectors is further divided into sub-units.