OTP Group sent a right of reply to my article on its bid for HSBC Malta. The reply is riddled with many half-truths which I may detail later if time permits.
However, it is important to note that the only reason OTP Bank has not been sanctioned by the European Union and is allowed to operate in Russia is that the European Commission granted this concession to Hungary in exchange for not vetoing military assistance to Ukraine. This bank will experience a very different reality abroad if Viktor Orban and his pro-Russian government doesn’t remain in power.
Note their typical Hungarian village mindset by thinking that we will be impressed because they are featured by S&P Global. It reminds me of someone very local.
OTP’s right of Reply to “Why the regulators won’t accept OTP Bank’s bid for HSBC Malta”
“The OTP Group is one of the leading, independent banking groups in Central and Eastern Europe, a listed company for thirty years, with a reputation for prudence and transparency. The banking group operates in compliance with all international sanctions and local laws in all its markets and is committed to respecting sanction restrictions, complying with relevant EU and other mandatory rules.
JSC OTP Bank Russia (hereinafter: “OTP Bank Russia”) is a very small player in the Russian market with a market share of less than 0.2% in outstanding loan volumes and represents 4% of the total loans of the international OTP Group. Following the outbreak of war, OTP Bank was the first to halt corporate lending in Russia. OTP Bank Russia cut its branch network by 25% in 2023, and since 2021, the total branch network has decreased by 39%.
OTP Bank Russia severed its business relations with state-owned companies and institutions and stopped distributing government bonds at the international group level.
In addition to this, OTP Bank Hungary significantly restricted international money transfer transactions and implemented a significant increase in commission. Unlike other European banks, OTP no longer offers a USD transfer facility to and from Russia as of May 2023.
OTP Group is exploring all its strategic options in Russia. As part of this, the banking group has made significant efforts toward a sale, for which it is currently utilizing the services of the international investment advisory firm Rothschild Martin Maurel. Throughout the process, the banking group is particularly careful to ensure that any future solution aligns with and complies with applicable international and local regulations. Currently, the Russian regulatory environment substantially limits the banking group’s ability to sell the Russian subsidiary bank, as it is subject to a specific presidential authorization.
At the end of 2022, the Russian operation repaid the full amount of its intergroup funding. Additionally, OTP Bank has been decreasing its Russian exposure through dividend distributions: between September 2023 and the end of 2024, a total dividend payment of RUB 41.8 billion (around EUR 420 million) has been approved.
Regarding Ukraine, OTP Bank is actively supporting Ukraine through various initiatives, demonstrating its broader commitment to bolstering Ukraine’s economy and aiding businesses in overcoming the challenges posed by the conflict. These initiatives include:
- OTP was the first to restart lending in Ukraine’s agricultural sector.
- OTP supported the Ukrainian budget through pre-paid tax contributions.
- To date, OTP Bank has provided nearly UAH 200 million (EUR 4.3-4.5 million) in financial and humanitarian assistance.
OTP’s CEO of its Ukrainian subsidiary currently serves as President of the Ukrainian Banking Association, underscoring OTP’s acceptance in the local market.
OTP plans to participate in future bank privatizations and is preparing to contribute to the country’s reconstruction efforts.
In support of an unbiased, fact-based assessment, we are sending you the S&P Market Intelligence 2024 ranking of Europe’s 50 largest listed banks, which ranked OTP Bank as the top bank in Europe:
Website Editor
Historian and Publisher
Leave a Reply