OTP eyes three more banks, then break

Deals

Photo by Jessica Fejos

OTP Bank wants to acquire three more banks in the region, after which it will take a break from a buying spree that has lasted for several years, Chairman-CEO Sándor Csányi told reporters after the lenderʼs AGM Friday, where shareholders approved a proposal to pay a HUF 219 per-share dividend on 2018 earnings.

Asked to elaborate on the decision to interrupt OTPʼs long series of acquisitions, state news wire MTI reported that Csányi quoted Winston Churchill following Europeʼs division after WWII: "After the meal comes the digestion period." He said the situation is similar for OTP, noting the scale of the acquisitions the lender has made, and adding that integrating these banks will now require a lot of work.

Csányi stressed that OTP is not putting an end to acquisitions. He augured a significant consolidation on the European banking market in the coming 3-5 years and said OTP wants to participate in that consolidation. He also noted that the bank had launched its biggest IT project in the past 20 years. 

OTP still wants to expand in Romania, a country with a population of 20 million where the banking market is undersaturated, and where many Hungarian businesses operate, Csányi said. He noted, however, that in March last year the National Bank of Romania had rejected a request by OTPʼs Romanian unit for approval of the acquisition of Banca Românească from the National Bank of Greece.

At the same time, Csányi acknowledged the decision to "end the experiment" of Touch Bank, OTPʼs virtual bank in Russia, which had continued to make losses.

Dividend approved; deputy chairman picked

At the AGM Friday, shareholders approved a proposal to pay a HUF 219 per-share dividend on last yearʼs earnings. Including dividends on treasury shares, which are paid to shareholders in proportion to their stakes, the dividend will come to HUF 221-222 per share.

The OTP Bank Group booked consolidated after-tax profit of HUF 318.3 billion last year. The dividend fund amounts to a total of HUF 61.3 bln.

Asked by a small stakeholder why OTP doesnʼt pay a higher dividend from higher earnings, Csányi explained that the lender is preparing to make more acquisitions, which requires capital. A higher dividend could also put capital adequacy at risk, he added.

The OTP chief also revealed that the board decided to reintroduce the position of deputy chairman and picked Tamás Erdei to fill the role.

Erdei earlier headed MKB Bank and is a former chairman of the Hungarian Banking Association.

Shareholders also approved amendments to OTPʼs articles of association at the AGM that give the board the power to separate the positions of chairman and chief executive officer "if necessary, in order to adapt flexibly to the significant international expansion of the Group and new market challenges."

Csányi stressed to shareholders that he has no intention of giving up either of his positions in the short term, even though the amendments allow for the possibility in principle.

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