In the past few years, OTP Bank Rt, Hungary’s largest retail bank by far, has seen its path to further expansion increasingly lie within the surrounding region.
Owing mainly to increased competition at home, the bank has acquired retail operations in Slovakia, Croatia and Bulgaria – and, with the 2004 acquisition of RoBank SA, Romania. Stated future targets include Serbia and Ukraine, but in spite of recent comments on the rising cost of Romanian banks, OTP clearly sees Hungary’s eastern neighbor as a growth center.
The bank’s growth into Romania was given further impetus last week, when OTP confirmed that it is one of the bidders for the purchase of Casa de Economii si Consemnatiuni (CEC), the country’s fourth largest bank.
The Romanian state called a tender on Aug. 10 for the sale of not less than 50% plus one share, but no more than a 75% holding in CEC. The established deadline for submitting bids was Aug. 31.
As of Dec. 31, 2004, CEC had IFRS-based total assets of €1.31 billion and shareholders’ equity of €149 million. With its 5.6% market share based on total assets, CEC is Romania’s fourth largest bank, having posted a net profit of €17 million in 2004. CEC serves approximately two million clients via a network of 1,407 branches, the largest in Romania.
OTP declared earlier that, besides organic growth, it is considering the possibility of development via acquisition in Romania. If successful, the acquisition of CEC would dwarf OTP’s current exposure in the country.
OTP completed the $47.5 million purchase of RoBank last July. The move, hailed by regional banking analysts, was its first venture into Romania.
RoBank, renamed OTP Bank Romania SA in 2005, was a small bank with just 16 branches nationwide. OTP announced it would invest up to $100 million in the next three to five years to expand the branch network. As a first step in the process, OTP raised RoBank’s capital by €10 million, while OTP President-CEO Sándor Csányi stated that the bank would step up branch openings, with 50 branches to be opened by year’s end and an eventual target of 200.
Csányi said OTP will expand RoBank regardless of further acquisition targets in either Romania or any other neighboring country.