Bancherul - BANCI / ENGLISH / OTP Bank eyes Romanian unit of RBS

OTP Bank, Hungary’s largest bank by assets, is in talks with the Royal Bank of Scotland to take over the British bank’s Romanian subsidiary, Romanian financial daily Ziarul Financiar reported, citing market sources. By acquiring the Romanian unit of RBS OTP would win some 2,000, mostly large corporate clients on the market.

"Talks are not held locally, but directly between the headquarters of Budapest and Amsterdam. No due-diligence process has been carried out, yet, with a preliminary price offer to be submitted first, followed by assessment," financial market sources commented for ZF.

OTP will make a preliminary bid for the Romanian unit of Britain’s biggest government-controlled bank in about two weeks, adding that none of parties have commented on the information by edition close (late on Sunday).

OTP’s management had announced already in early 2010 that it was looking for investment opportunities in countries where it was already present but with a not big enough market share, mentioning Slovakia, Serbia and Romania among the potential target countries.

OTP Chairman-CEO Sándor Csányi said after the bank’s annual general meeting last week, cited by Portfolio.com, that they are currently in talks with a number of banks on takeover issues and even has a specific acquisition target in Romania.

If OTP bought that bank in Romania, it would step forward to the 10th or 11th place in terms of market share in Hungary’s neighbouring country where it is currently the 14th or 15th largest player, he added.

Deputy CEO László Wolf added that the total assets of the potential target bank are slightly bigger than the balance sheet total of OTP Romania.

The sources claim OTP has made inquiries at two banks in Romania. One of them is Banca Comerciala Carpatica, based in Sibiu, but talks have broken off due to uncertainties about the quality of its loan portfolio. But the other bank, RBS, is a "very good bank" in Romania, although OTP will still have to size up the risk that would come with large corporate clients should it decide to acquire the bank. OTP could be done with the evaluation by mid-May, sources say.

RBS announced in February 2009 that along with a number of its other assets it wants to sell its Romanian interest as well, in scope of its restructuring programme, which was necessitated by the gradual and nearly fully-fledged nationalisation of the bank. The Romanian subsidiary has not been sold since then because it allegedly would not have fetched as much as RBS wanted to receive for it.

RBS operates in 15 Romanian cities with 28 branches, against OTP’s 106 branches there. But it is also present in the most economically-active areas of the country via its nearly 2,000 corporate clients. RBS has targeted to have at least half of Romania’s 1,000 largest companies among its clients in the next two years.