July 21, 2017 / 9:45 AM / 8 months ago

Hungary's OTP to buy Banca Romaneasca from Greece's NBG: sources

BUDAPEST/ATHENS (Reuters) - Hungary’s OTP Bank OTPB.BU has agreed to buy Romania’s Banca Romaneasca from the National Bank of Greece (NBG), two sources with knowledge of the deal told Reuters on Friday, continuing OTP’s acquisition drive in central and eastern Europe.

People pass by the OTP bank branch in Budapest, Hungary February 29, 2016. REUTERS/Laszlo Balogh

“There is a deal, NBG’s unit will be sold to OTP,” a source in Athens said.

OTP executives have said publicly they were in the running for Romaneasca as well as other banks in the region as they look to bolster the bank’s presence in central Europe.

NBG (NBGr.AT) plans to sell more assets in the Balkans, including its Romanian operations, to complete a restructuring plan agreed with European authorities, its chief executive Leonidas Fragiadakis told Reuters this month.

“This M&A event was well-anticipated,” Ipopema analyst Norbert Harcsa said. “OTP could have a 3.6 percent market share (in Romania) versus a management target of 5 percent. The price-to-book could be the same as it was in Croatia (in May).”

OTP bought Croatian Splitska Banka from Societe Generale for a price close to book value.

OTP, which will add Romaneasca’s network of about 110 branches, is also expected to pay back a loan of 550 million euros ($625 million) that Banca Romaneasca borrowed from NBG.

Apart from Romaneasca, Fragiadakis has said NBG would sell smaller operations in Serbia, Albania and Cyprus as part of agreements with regulators.

One asset the bank still has is Serbia’s Vojvodanska Banka, which is also a possible target for OTP, which has said it is looking at potential acquisitions there.

    The Hungarian bank did not reply to questions seeking comment on the Romaneasca deal or any further possible ones.

    OTP is one of the region’s largest independent banks, and weathered the financial crisis better than many rivals.

    After Hungary imposed special taxes on the financial sector, it took a cautious line, doubling liquidity reserves from 4 billion euros in 2011 to 8.3 billion euros at the end of the first quarter.

    As those special taxes have been gradually lifted, OTP has begun to expand in the region - just as Greek banks are looking to sell assets.

    OTP’s core equity tier 1 capital ratio - a key measure of financial strength - was 16.6 percent at the end of the first quarter after hovering around 15 percent for the last five years.

    Reporting by Marton Dunai and George Georgiopoulos; Editing by Jason Neely and Mark Potter

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