By Tamas Csonka in Budapest
OTP Bank made an indicative offer for a bank in an EU member state on April 25, chairman-CEO Sandor Csanyi told shareholders at AGM on Friday, 26 April. If the deal materialises, the acquisition would be the biggest in the lender's history.
At a press conference after the AGM, Csanyi said the bank for which OTP had made was in an EU country, in which OTP did not have a presence. He did not provide further details, triggering speculation in financial media about the possible acquisition target.
He added that OTP had long weighed the chances for an expansion in Poland and that it had 'not gladly' pulled out of Romania, but it had become clear that it would not get the chance to make acquisitions there.
OTP finalised the sale of its Romanian subsidiary this year after it failed to reach a desired market threshold and authorities blocked its acquisition of Banca Romaneasca from its Greek owner in 2018.
When financial portal Portfolio.hu questioned about potential targets in Western Europe, where OTP has no presence, Csanyi revealed that OTP had previously considered acquiring a major German bank. However, the plan was abandoned due to concerns over inefficiencies stemming from strong unions and the management structure. OTP had explored opportunities with a significant Austrian bank and had evaluated options in Southern Europe.
Based on this information, Portfolio speculated that the potential target could be a Greek bank.
OTP would be willing to sell its stake in Russia at a discount of up to 50%, probably at $400mn, but after taxes, it could receive $280mn for the stakes.
In Ukraine, the Hungarian lender is ready to expand its market presence with further acquisitions, as the privatisation of state banks in Ukraine is imminent.
OTP is the market leader in five countries and has a significant market share in several others, Csanyi told the quorum. The bank’s capital position is stable, organic growth is strong, credit quality has improved at group level, and the negative impact of one-off items and the war in Ukraine has been mitigated.
At the AGM, shareholdersapproved the bank’s financial report and the board’s dividend proposal. OTP booked a record HUF1 trillion (€2.55bn) in profit in 2023, of which HUF150bn is distributed to shareholders, or HUF535.7 per share, translating to a 3% dividend yield.
Besides Hungary, OTP Group operates in nine countries of the region: in Albania (Banka OTP Albania SHA), in Bulgaria (DSK Bank), in Croatia (OTP banka Hrvatska), in Serbia (OTP Banka Srbija), in Slovenia (Nova KBM d.d. and SKB d.d.), in Moldova (OTP Bank S.A.), in Montenegro (Crnogorska komercijalna banka) in Russia (OAO OTP Bank) and in Ukraine (OTP Bank JSC). The company closed its first acquisition outside Europe last year, buying Uzbekistan’s fifth-largest lender Ipoteka.
Foreign units generated more than 60% of the net profit in 2023.
Addressing the AGM, Finance Minister Mihaly Varga said OTP was a 'fixture' on the local banking market and acknowledged the necessity of a capital-strong banking system for credit to support the operation of the economy and the country's economic resilience. The stability of Hungary's economy is also served by full employment, the high investment rate and the reduction in state debt levels, he added.
