OTP Bank Buys RoBank For 47.5 Mln USD

Ziarul BURSA #English Section / 30 aprilie 2004

The Hungarian bank remains interested in the BCR privatization

OTP Bank aims for 3-4 percent of the Romanian banking market

Future plans include insurance operations in Romania

After a long period of pondering and testing the Romanian market, OTP Bank, the largest bank in Hungary, has come to the conclusion that it is the right time to invest in Romania. OTP yesterday bought 100 percent in RoBank, thus securing a market share of one percent (calculated according to asset value) and the 13th position among banks in Romania. The deal came shortly after OTP Bank had acquired the largest retail bank in Bulgaria and a medium-sized bank in Slovakia. In Romania, OTP took full control of RoBank by buying 53.5 percent from the English group Balli and 46.5 percent from Mustafa Bayraktar.

OTP president Sandor Csany yesterday addressed a press conference called to announce the acquisition: "OTP has paid 47.5 million USD for 100 percent in RoBank - a fair price, proportional to the value of the bank. This is only a first step in Romania." Also yesterday, Csany was received by Premier Adrian Nastase to whom he presented OTP's post-privatization history and expressed the Hungarian bank's interest in participating in the privatization of the Romanian banking system. Csany said: "It appears that The Government welcomes our entrance on the Romanian market and I believe there are good chances that we may make further acquisitions. Until then, the acquisition of RoBank will consolidate diplomatic relations between Romania and Hungary.

Following this transaction, RoBank has become a fierce competitor to the rest of the banks in Romania. It is expectable that the bank may start expanding especially in Transylvania, home to a very substantial Hungarian community.

Strategic Target: The Retail Market

The new owner of RoBank intends to expand the bank's operation especially on the retail market, firstly by increasing the bank's network from 14 branches presently to 100 branches in three-to-four years. "We intend to apply the strategy we have applied in Hungary, Bulgaria and Slovakia and focus on retail banking," Csany said.

In order to accomplish this objective, OTP intends to establish a financial group offering investor, insurance, leasing and asset management services. For the time being it has not been decided whether to set up a new insurance company or acquire one of the 15 small ones operating in Romania.

The bank estimates that some 100 million USD is necessary to develop business in Romania. A significant part of this sum will be used to increase the share capital of RoBank, which now stands at 435 billion ROL. OTP deputy general manager Laszlo Wolf said: "The Romanian banking market is currently experiencing a very aggressive expansion process, so the costs will be very high. We will offer very competitive electronic services: Internet banking and mobile banking very soon and credit cards towards the year-end. In Hungary, we are the leaders of the mortgage loan market and I believe that Romania will see a tremendous boom on the mortgage market in the next few years." RoBank, which has been focusing on corporate banking so far, concluded last year with assets worth 125.8 million EUR and a net profit of 2.2 million EUR. The bank granted loans worth 56.9 million EUR and attracted deposits worth 28.7 million EUR. RoBank was licensed by The National Bank to operate as a full service bank in 1996 and became operational in 1997. For the time being, it has a share capital of 425 billion ROL. The bank corresponds with 171 banks in 45 countries on four continents and has signed SWIFT arrangements with 406 banks worldwide. RoBank has been committed to financing exports, small- & medium-sized enterprises and rural businesses and has signed agreements in this respect with The European Bank for Reconstruction and Development (EBRD) and The Ministry of Finance.

OTP Bank is the largest bank in Hungary and one of the largest ones in CEE. It has recently acquired DSK Bank, the largest retail bank in Bulgaria, and IRB in Slovakia. Future plans include the banking markets in Ukraine, Serbia-Montenegro and Bosnia-Herzegovina. OTP Bank concluded last year with assets worth 13.23 billion EUR and a net profit of 316.8 million EUR. In Hungary, it has a market share of 26.2 percent, if calculated by asset value, of 32.3 percent if calculated by attracted deposits and of 20.9 percent if calculated by disbursed loans.

OTP shares are traded on The Budapest Stock Exchange, The Luxembourg Stock Exchange and SEAQ International in London.

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