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OTP eyes takeovers in Eastern Europe, Turkey

Hungary\'s biggest bank OTP will seek new acquisition targets in Eastern Europe and Turkey from 2008 after it consolidates its purchases of the past two years, Chairman and Chief Executive Sándor Csányi said.

The bank spent over €1 billion ($1.36 billion) in the past two years on buying units in Russia, Ukraine, Serbia and Montenegro and significantly expanded its Romanian unit, which limited its ability to make further acquisitions. OTP, which bought six banks last year alone, has said before that it would pause in its takeovers this year to integrate its recently acquired units. Csányi said expansion could resume as early as next year. „We are primarily looking at Eastern Europe and Turkey, but if we look further, beyond 2010, we can also consider Asia. We believe we could expand successfully in one or two countries there,” Csányi told private broadcaster Info Radio on Saturday. Csányi said OTP would only look at banks in which it can acquire a majority stake and, in a shift from its earlier stance, OTP\'s management was ready to spend up to six times of book value on an attractive target. „Earlier we thought it was not worth buying a bank over two or three times book value. Today, however, I think we need to look further and it is worth looking at buys of even five to six times book value,” Csányi said. But he reiterated the bank would not issue new shares to finance any acquisition. He said OTP\'s foreign units, where growth potential is bigger, will contribute 53% of earnings on the group level after 2010, replacing OTP\'s domestic operations as the main driver of earnings growth. Csányi said the OTP\'s guidance for consolidated pre-tax profit of €2 billion by 2010 was comfortably within reach as it included a conservative estimate for domestic growth and did not take any new acquisitions into account. He said OTP would increase the number of branches on the group level to 1,900 from the current 1,360. (