Hungary’s OTP Bank may be interested in buying up to two more financial institutions in Croatia, local daily newspaper Jutarnji list reported on Monday. One of them is Addiko, while the other would be a much bigger bite, the Croatian operation of Raiffeisen.
OTP is among those that are eyeing Croatian bank Addiko, the Austrian owner of which started sales preparations last autumn, according to unofficial information. OTP has neither denied nor confirmed the speculation. To the paper’s inquiry it replied that it does not comment rumours about potential acquisitions, adding that the Hungarian bank is constantly monitoring takeover opportunities and informs the media on time about every key decision.
The paper also said OTP is interested not only in Addiko, but also in Raiffeisen’s Croatian operation, RBA, should it fail to acquire Addiko. RBA is larger than Addiko, its market share is close to 8%.
Jutarnji list said OTP wants to become the second largest bank in Croatia, but Addiko would not do the trick, and it would be closer to its goal if it bought RBA, as that transaction would put its market share close to Privredna Banka’s (PBZ)’s 20%.
OTP’s current market share is slightly north of 10%, and Addiko would boost it to over 14%, by which OTP would get close to the third largest bank in the country, Erste. Buying RBA would increase its market share to over 18%.
Addiko has been profitable in the last few years, with after-tax profit reaching 230 million kuna in 2017 and 171 mn in 2018. The bank’s total assets amounted to HRK 18.38 bn at the end of last year, which translates into nearly HUF 800 bn. Its equity was HRK 2.9 bn or HUF 126 bn at end-2018. In the last few years, OTP has been buying banks at face value on average. Taking this into consideration it could pay about HUF 126 bn for Addiko. The Croatian unit of Raiffeisen had HRK 4.5 bn worth of equity at the end of last year, which equals nearly HUF 196 bn at current exchange rates, i.e. at a 1x P/BV OTP would pay about this much.
A few years ago, OTP has already strengthened its presence in Croatia. It announced at the end of 2016 that it would acquire Splitska Banka, and the transaction was closed in Q2 2017. Before the deal, OTP’s market share in the country was merely 4%, while with Splitska Banka it grew significantly, and OTP became the fourth-largest bank in Croatia.
Hungary’s largest lender is the most active financial institution on the European M&A market. Its new acquisition streak kicked off after the 2008 crisis in 2014. Since then it has expanded not only on its existing markets but also in new countries. In the last few transactions it bought banks from France’s Societe Generale Group, as SocGen has been gradually withdrawing from the region and OTP is not its “regular buyer".
OTP Chairman-CEO Sándor Csányi told the bank’s annual general meeting earlier this month that OTP was gearing up for additional takeovers, saying that three more banks will be acquired and then OTP will stop. The acquisitions are not over yet. Csányi said that after a pause, OTP will lunge into action once more, as major consolidation are to take place on the European banking market in the next three to five years and OTP wants to be part of that.
OTP’s share price did not respond to the report. In line with the general (mostly negative) market sentiment, it dropped nearly 0.6% today.
Charting is displayed using TradingView's technology, a platform, where you can build advanced charts,
spot upcoming trends in the stock screener, and find inspiration in multiple trading ideas
