OTP Rebuts Ukraine’s Claim it is an International War Sponsor

Ukraine Crisis

File photo shows an OTP Bank branch on Malaya Pokrovskaya Street, Nizhny Novgorod, in central Russia, on March 25, 2016.

Photo by VladimirMPetrov / Shutterstock.com

Ukraine’s National Agency on Corruption Prevention (NACP) sparked controversy in Hungary when it included the country’s largest lender, OTP Bank, in a list of “international sponsors of war” in an announcement posted on the agency’s website. NACP cited the bank management’s decision to continue its operations in Russia and its recognition of the “so-called Donetsk and Luhansk ‘people’s republics’” as the primary reasons for including the lender on the list.

OTP Bank angrily responded that its inclusion on the list was “completely undeserved” in a statement it sent to state news agency MTI.

OTP Bank has subsidiary banks in Croatia, Slovenia, Slovakia, Montenegro, Romania, and Ukraine, as well as Russia, but the NACP announcement emphasized that the lender remains among the 50 largest banks in the latter country, serving more than 2.2 million customers across 1,850 locations there.

NACP added that OTP Bank’s market leadership in specific fields in Russia, such as ranking second in point-of-sale lending, with a market share of 15.3%, and eighth in the country’s credit card market, underscored its importance to Russia’s economy, “which is struggling with and trying to circumvent Western sanctions.”

The agency also claimed that OTP Bank provides loans to the Russian military at preferential rates and that Russians called up for military service are able to apply for deferment on credit and loan payments with the lender.

In referencing “Law of the Russian Federation No. 377-FZ of October 7, 2022,” NACP said that OTP Bank implicitly recognized the illegal referendums held in Donetsk and Luhansk that declared the regions’ independence and annexation by Russia.

“Thus, by continuing the financial operations of the Russian unit,” the announcement concluded, “OTP Group clearly demonstrates support and sponsorship of terrorism.”

OTP’s Rebuttal

OTP Bank’s statement of denial in response went into some detail.

“OTP Bank condemns all aggression against sovereign states, including that against Ukraine, and is committed to supporting Ukrainian citizens and the country’s economy,” the lender said. “In addition to maintaining continuous service and lending activities, our bank has assisted Ukraine with humanitarian support in the billions of forints and offered long-term accommodation and provisions for several hundred war refugees,” it added.

The Hungarian bank went on to refute what it called a number of “false claims” made by NACP, such as those which highlighted its importance to the Russian economy. OTP Bank said its market share in Russia stood at just 0.17%, while foreign-owned banks with “significantly larger” market shares in the country had not been included on the list. The bank also denied that it offered “preferential credit” terms to the Russian military and disputed its “recognition of the existence of the Donetsk and Luhansk ‘people’s republics.’”

During a break in a meeting of European Union foreign ministers in Stockholm on May 12, Minister of Foreign Affairs and Trade Péter Szijjártó called the inclusion of OTP Bank on the war sponsorship list “scandalous” and “unacceptable,” adding that OTP Bank had “not broken any rules.” While the bank remained on the list, Szijjárto said it would be “very difficult” for the Hungarian government to negotiate on further sanctions requiring additional sacrifices.

Hungary subsequently blocked the disbursement of the eighth tranche of funds from the European Peace Facility worth EUR 500 million for arms from EU member states destined for Ukraine, Italian news wire Ansa reported on May 15. Although the EUR 500 mln tranche was set to be paid on Monday, May 22, Budapest put that on hold, allegedly demanding “guarantees” that the European Commission will not use the European Peace Facility exclusively to help Ukraine in the future.

This article was first published in the Budapest Business Journal print issue of May 19, 2023.

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