OTP Bank closing in on MKB acquisition

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OTP Bank is moving close to acquiring MKB Bank, the Hungarian unit of Germany-based Bayerische Landesbank (Bayern LB), Reuters reported on Wednesday, citing three unidentified sources close to the matter. Reuters said the sources indicated that OTP and MKB have been engaged in intense talks regarding the sale over recent weeks and are likely to reach a deal.

One source informed Reuters that OTP and Bayern LB, the latter of which is 75% owned by the Free State of Bavaria and 25% of which is owned by the Association of Bavarian Savings Banks (SVB), have not yet reached agreement on the price of the transaction. MKB lost €409 million in 2013, Reuters noted.

OTP Bank representatives stated to national news service MTI that the bank does not comment on press rumors, adding that the bank has stated many times in the past that it continually examines opportunities to make acquisitions. BayernLB representatives also declined to comment on the record.

Last week, Bayern LB reported consolidated profit of €120 million for 2013, down 84% year-on-year, on restructuring losses of €164 million, 2½ times more than in 2012. MKB took a €409 million loss before tax in ’13, up from a loss of of €308 million in 2012. While capital ratios were reportedly higher than ever and core business performed strongly,MKB was cited as again weighing hard on earnings, with Bayern LB representatives warning that “the obligation to sell MKB and regulatory requirements will shackle profits” in 2014 as well. 

As a condition for a German- and EU-backed bailout Bayern LB received during the crisis, the bank must part with its majority stake in MKB by 2015.

MKB Bank in January approved a HUF 80.2 billion capital raise, subscribed by it majority owner, Bayern LB.

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