OTP Bank Nyrt. agreed to buy Banco Comercial Portugues’s Romanian unit to buttress its presence in the neighboring country as the Ukrainian crisis hits the profitability of Hungary’s largest lender.
Hungary’s biggest bank will pay 39 million euros ($52 million) for Millennium Bank Romania SA, which had about 635 million euros of assets and a market share of 0.8 percent, OTP said in a statement today. It will also ensure the full reimbursement to BCP of funding currently provided to Millennium, the Romanian unit said in a statement.
“This acquisition effectively supports our middle term strategic aim to get into the top 10 banks in Romania as well as to reinforce our position as a solid universal financial services provider,” OTP Bank Romania Chief Executive Officer Laszlo Diosi said in the statement. “The acquisition of Millennium Bank represents a further step to our expansion on the Romanian market and will strengthen our market presence, especially in the retail field.”
OTP, which has operations in nine countries in central and eastern Europe, is seeking to offset a profit erosion brought about by the deadly conflict between Ukraine and Russia, two core markets for the lender. BCP’s restructuring plan, approved by the European Union last year, included the sale of its Romanian subsidiary as well as a reduction in its stake in Piraeus Bank SA (TPEIR) of Greece.
OTP will consider further takeovers in Romania after completing the integration of the BCP’s unit as it seeks to increase its market share to about 5 percent from 2.1 percent, Diosi said.
BCP has 56 branches in Romania and the transaction brings OTP’s Romanian market share to 2.1 percent. OTP’s Romanian unit posted a net adjusted loss of 4.1 billion forint ($16 million) in 2013.
OTP posted a 48 percent decline in first-quarter profit on losses in Russia and Ukraine and said its subsidiaries in the two countries will remain unprofitable this year.
To contact the editors responsible for this story: James M. Gomez at firstname.lastname@example.org; Michael Winfrey at email@example.com; Pawel Kozlowski at firstname.lastname@example.org Michael Winfrey, Pawel Kozlowski