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OTP weighs Tesco purchase, scraps venture on business grounds

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Hungarian-owned commercial lender OTP Bank admitted that it was considering the acquisition of the European portfolio of U.K.-based retail chain Tesco, but decided to scrap the idea based on the financial risks the purchase could cause, the lender told Hungarian online daily Népszabadság’s nol.hu yesterday.

The bank commented on a report published yesterday morning in Hungarian weekly Figyelő, which suggested OTP owner Sándor Csányi was asked to cancel his bid for the retailer by Prime Minister Viktor Orbán, fearing the impact it might have on Hungaryʼs political relationship with Poland. 

“The theoretical possibility of buying Tescoʼs Central European network, either in whole or in part, came up at OTP Bank. In the early phase of consideration, it became clear that the acquisition would mean a disproportionately large burden and risk, compared to our planned exposure in the retail sector, thus negotiations did not even take place,” Hungarian news agency MTI cited the Népszabadság report today.

The lender also told the portal that Csányi is not planning to make investments in the retail sector.

Speculation about Tesco pulling out of the area of V4 countries arose in the fall, but Tesco has since said that it had concluded the restructuring of its portfolio with the sale of its South Korean unit and added that its operations in Central Europe can be expected to continue, MTI added.

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