Dr. Sándor Csány: Being the 4th largest, OTP in Moldova will grow both organically as well as through possible mergers and acquisitions
In 2019, OTP Group from Hungary acquired from Societte Generale a package of five banks in the Eastern European region, including the Moldovan Mobiasbanca. Since 1995, OTP Bank has completed 25 bank acquisitions: 11 transactions in 8 countries in the period 2002 – 2008; 14 deals in 9 countries in the period 2014-2023. The group became one of the fastest growing in Europe (and not only). In 2023, it acquired a bank in Uzbekistan.
Today OTP Group operates in 11 countries. According to data at the end of the third quarter of the current year, the total value of assets is 103.6 billion euros; own capital – 11.5 billion euros; 1312 subdivisions; 37863 employees. Revenue for 2023 - 2.9 billion euros.
OTP Group holds the position of the best performing bank in Europe according to Standard and Poor’s Global Market Intelligence European ranking. The banks of the group occupy the 1st positions by size of assets (and a number of other indicators) in Hungary, Montenegro, Bulgaria, Serbia, Slovenia, the 4th in Moldova, Croatia and Albania; the 5th in Uzbekistan, 11th in Ukraine, and 30th in Russia.
In 2022, OTP sold its assets in Romania, as noted by the bank, because it does not fit into the group's strategy to be one of the top players in a given market.
The Economic Press Club (CPE) secured an interview with Dr. Sándor Csányi, Chairman of the Board of Directors, Chairman & CEO of OTP Group.
CPE: How would you describe the results of OTP's work in Moldova for the past five years since the acquisition of Mobiasbanca? Did it prove to be a successful investment?
Dr. Sándor Csányi: The beginning was not as smooth as we wanted it to be. The main issue lay in the selection of new management; this negatively affected the initial stage of the bank's development. That is, we faced difficulties that, you could say, were the result of our own decisions. However, now the situation has changed dramatically, and I can confidently say that we are satisfied with the current management.
Moldova, as you know, is not going through the easiest times from the point of view of the economy, but, despite this, key indicators demonstrate significant growth. If you look at GDP and budget deficit reduction, you can note that the economy shows positive changes. Of course, not all aspects are in ideal condition, there are still questions that affect the country’s economic stability.
CPE: For these five years, what specific investments were made in the development of your bank in Moldova?
Dr. Sándor Csányi: We paid great attention to the modernization of our systems and technologies. In particular, more than 20 million euros were invested in the modernization of core banking and card systems in the last two years. We focused on implementing innovations that improve work both with corporate clients and with individuals. These were important investments that allow the bank to develop and adapt to new market challenges. In the future, we plan to continue on this path and invest even more. We set ambitious goals, including the implementation of digital technologies to serve individuals and corporate clients. In the next few years, the investment can reach about 50 to 60 million euros.
CPE: How do you assess the current position of the Moldavan bank compared to other banks within OTP Group?
Dr. Sándor Csányi: At the moment, our Moldovan bank is still behind group leaders in terms of indicators. However, taking into account all planned investments and modernization measures, I am confident that we will be able to occupy leading positions. It should be noted that the Moldovan banking market is highly competitive, which entails the need for consolidation. We see that the market is moving in this direction, and we actively monitor this process.
CPE: Does that mean that you are considering the possibility of acquiring one other or even several banks in Moldova?
Dr. Sándor Csányi: If there is a suitable asset for acquisition, we are ready to consider such an opportunity to strengthen our positions.
CPE: What long-term strategic plans do you see for the OTP Group in the next 3-5 years? Are there specific directions you intend to focus on?
Dr. Sándor Csányi: Our main strategic goal is the further growth of the Group, both organically and through acquisitions. We prefer markets where it is easier to integrate new banks, where there are opportunities to create synergies with our current assets. This concerns both management and technological processes. In recent years, we have grown significantly, and our strategy is to continue this journey. We see opportunities in markets where banks are not yet fully developed, and we intend to increase our presence in these regions.
CPE: In recent years, the OTP Group has significantly increased its assets. This was very rapid growth. Is there a risk that such high growth rates can threaten stability?
Dr. Sándor Csányi: We understand the possible risks and carefully control our growth. Our risk management system is well thought out and operates at the level of each group division. Every month we conduct a detailed analysis of credit portfolios for all countries in which we are represented, and discuss the results with management. We have strict rules in the area of credit, and carefully monitor the implementation of these standards. We always strive for balanced growth, so we don't consider rapid growth dangerous for stability. Our strict and widely recognized risk approach reflects in the European Banking Authority’s assessment: based on their stress test OTP Group is the fourth most risk-resilient bank among the 70 largest banks in Europe.
CPE: How do you assess the competition from other banks, especially in Eastern Europe?
Dr. Sándor Csányi: In our development and expansion, we offer stability in different countries without presenting any danger to the banking sector or the macro economy – on the contrary, strengthening them, as we strive to be among the leaders. In the European Union, large global banks maintain divisions that occupy only 1 to 2% of a particular market. Such banks could show better results and contribute to local economies more by using the potential of the “parent” to fuel growth. In the end, I think they understand all this, but they believe that sometimes it is simply worth maintaining a presence in the country.
We always focus on economic stability and the provision of quality services to our clients. We do not participate in political processes, we don't finance mass media or political parties. This allows us to remain neutral and focus on business. Of course, in some countries there are players who are not happy with our presence, but this is natural competition. We focus on developing our services and do not deal with issues related to politics.
CPE: In recent years, the question of OTP Group’s possible exit from Russia is actively discussed. However, this may lead to significant losses for the group. Would you comment on that?
Dr. Sándor Csányi: First of all it is important to emphasize that we are a minor player in Russia with a 0,3% market share and only provide cash loans to individual clients. We reduced corporate lending dramatically and ceased sensitive services like doing business with state-owned organizations, USD transfers, etc.
If we decided to leave, it would lead to a loss of several hundred million euros. The local regulatory framework imposes a 40% mandatory discount of the state-evaluated market value of the bank and a 35% extra tax on the full value. In the end, we would be left with only about 5% of the total value. It is not a coincidence that since this regulation is in place, no bank has left Russia.
Besides economic reasons there is a moral issue as well: leaving today would equal an injection of hundreds of millions of euro into the Russian economy. I think that this kind of gift could be rightly criticized as well.
CPE: What markets, are you considering for the expansion of the OTP Group? Do you plan to focus on any specific regions?
Dr. Sándor Csányi: Besides our current markets, Central Asia is currently in the center of our attention. We have already started working successfully in this region, and the first results show that we have great prospects for further growth. Local markets have great potential in terms of banking services development and innovation. The young population of these countries actively uses new technologies, which gives us excellent opportunities for investment. We see good prospects for further expansion of our presence here.
CPE: If we talk about Moldova, do you see an opportunity for OTP Bank to become the third largest bank in the country?
Dr. Sándor Csányi: We definitely strive for this. Our goal is to be among the top three banks in Moldova. Now we are fourth in size, but we intend to grow both organically and through possible mergers and acquisitions. The Moldavian banking market is highly competitive, but we see opportunities for consolidation, and if suitable offers appear, we are ready to consider them.
Alexandru BURDEINII,
Irina MATENKO,
The Economic Press Club
