OTP Bank CEO Sándor Csányi called a sharp drop in the bank’s share price in the last minutes of trade on Thursday an “intentional attack”.
OTP Bank dropped more than 14% to Ft 3,855 in the last minutes of trade on Thursday. OTP Bank has already reported the end-of-session transaction that caused its share price to plummet as a case of financial fraud to the police, and it will report it to the UK authorities next week. If the police expect help from the bank, it can most probably name the hedge fund or the person that made the deal, as well as started rumors about the bank being nationalized.
OTP Bank’s share price reached the level of other banks in the region on Thursday, Csányi said. He added that the bank had never intervened to prop up its share price, overlooking a few treasury share purchases. Csányi said the quality of OTP Bank’s assets has not deteriorated and it targets profits of more than €1 billion this year. The profit figure means a 25% return on capital, which is extraordinary, he added.
OTP Bank’s capital position is extremely strong, Csányi said. It has a capital adequacy ratio of 14% -- the law requires an 8% ratio -- a ratio that few banks in few countries can match. Csányi said reports that deputy-CEO László Urbán had said at a conference in Vienna several days earlier that OTP Bank was in “survival mode” had not helped the bank. What that really meant was that OTP Bank has followed a strategy over the last several months that puts it in a position to survive any crisis, he added.
If OTP Bank cannot issue a single eurobond this year or next, and if it cannot renew its maturing eurobonds, it poses no problem, as the bank has Ft 100 billion in reserves at its disposal, Csányi said. Because OTP Bank is increasing its reserves, both in foreign currency and forints, it is reducing its business activity, but not by a significant amount.
Csányi said the finance minister had offered to guarantee OTP Bank’s interbank loans, but he had said the bank did not need any external liquidity, and if it did, the bank would get it on the market. Yields have risen to such an extent that the bank does not wish to issue bonds or take out credit, he added.
The stock lost another 14% on Friday to fall to Ft 3,300, bringing the market valuation of eastern Europe’s fifth largest listed bank to $4.7 billion. Concerns over OTP that compounded fears that the global financial crisis could spill into the Central and Eastern European banking system dragged on the region’s currencies, which hit new multi-month lows to the euro. Other banking stocks in the region fell as much as 8%. (MTI-Econews)