OTP’s apetite is still growing

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Sándor Csányi, chief executive of Hungary's OTP Bank Nyrt, has long sought to carve out a place for himself on a larger, European stage. Step by step, Csányi is making progress. Already the largest independent bank in central-eastern Europe, OTP has made six acquisitions - three in Serbia, one each in Ukraine, Russia and Montenegro - over the past seven months. OTP has bid for Romania’s Casa de Economii si Consemnatiuni SA (CEC) bank; bought a 96.4% stake in Investsberbank of Russia for €373 million; acquired 67% of small Serbian bank Kulska banka for €118.6 million, only within the previous two months.
Hungary's OTP has added an intriguing name to its potential acquisition targets: Austria's troubled Bawag PSK Group. Owned by the Austrian Federation of Trade Unions, Bawag is scheduled to be sold by the end of the year and has attracted interest from 50 financial institutions, including several large banks and insurers. At first glance, targeting Bawag would stray from OTP's proven model of turning round inefficient banks in high-growth markets, namely in eastern Europe. But Csányi said, Bawag has much in common with many of the bank's previous acquisitions. "It is not so far from a state-owned bank," he said. "Bawag is a big retail bank, and what we see from the outside tells us we could manage it more efficiently." Csányi added that several large European investment funds were interested in becoming partners with OTP in a potential bid for Bawag. Such a coupling could give OTP the financial support it would need to make the deal. OTP's management, in turn, would bring its strength in turning round bloated, inefficient banks. "There are a lot of financial investors - some huge funds - that have said they would join with us if we buy," he said. "They realise that we would create value." Bawag, which operates 1,500 branches in Austria, has total assets of €57.8 billion. It also owns subsidiaries in the Czech Republic, Slovakia and Slovenia.
There are some other competitors, like UniCredit SpA, Italy's biggest bank, wants to further expand in its home market and abroad after last year's purchase of Germany's HVB Group, Chief Executive Officer Alessandro Profumo said. The Milan-based company already considered acquisitions of Bankgesellschaft Berlin's consumer-banking unit Berliner Bank and 98 branches of consumer-loan specialist Norisbank. It may look at other possible German acquisitions, he said. Deutsche Bank AG last month agreed to buy Berliner Bank for €680.5 million, a price that Profumo said was above UniCredit's threshold. The bank also sees room for growth in Italy, where there will be the next round of consolidation among lenders, Profumo said. In Austria, where UniCredit owns Bank Austria Creditanstalt AG, it may consider buying Bawag PSK, the bank linked to the bankruptcy of Refco Inc., under some conditions, Profumo said, declining to elaborate. (Financial Times, Bloomberg)

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