April 29, 2019 / 2:30 PM / 3 months ago

Hungary's OTP eyes fresh acquisitions in Balkans

ZAGREB/BUDAPEST (Reuters) - Hungarian banking group OTP is eyeing new targets in former Yugoslav nations in a quest to expand regional influence and continue a rapid asset growth that has sent profits to new highs, a newspaper and financial sector sources said.

The Budapest-based lender could look at two targets in Croatia, where last year it acquired Splitska Banka and became the fourth biggest bank, a local daily reported on Monday.

OTP has already acquired much of the south east European network of French giant Societe Generale, adding assets in Croatia, Serbia, Bulgaria and elsewhere, but wants another two or three more acquisitions.

The prominent Croatian daily Jutarnji List reported that OTP is interested in acquiring Austria’s Addiko Bank unit in Croatia or a unit of another Austrian group, Raiffeisen.

After acquiring Splitska Banka, OTP controls 10 percent of the Croatian market, according to the Croatian National Bank’s figures from the end of last year. Addiko holds 4.5 percent and Raiffeisen Bank Croatia controls about 8 percent.

If an acquisition of the Addiko unit fails, OTP will consider Raiffeisen’s unit, as its goal is to eventually become the second biggest bank in Croatia, Jutarnji List reported, citing undisclosed industry sources.

Reuters could not independently verify that information.

A Raiffeisen spokesman said the lender had no intention to make changes to its current network.

Raiffeisen’s 2018 profit of 46 million euros ($51.3 million) in Croatia was less than 4 percent of the group’s total but was up 77 percent year-on-year, according to its annual report.

An Addiko Bank spokesman said the bank had no comment.

Croatia’s two biggest banks are Italian-owned Zagrebacka Banka and Privredna Banka Zagreb, with market shares of 27 and 20 percent respectively. Both are owned by Italian parent companies.

Two sources with knowledge of the situation told Reuters that OTP was considering a deal to acquire Slovenian lender SKB, which would mark its entry into the west Balkans nation.

SKB, which controls about 10 percent of the Slovenian market, is also a Societe Generale affiliate.

OTP Bank did not comment on specific targets, adding it sought to expand through acquisitions in general and would detail any deals in due course.

OTP broke the 1 billion euro barrier in net profit last year and expects to top that this year as acquisitions continue. It will stop to consolidate new buys after this year, OTP said.

A financial advisor with a focus on eastern European markets said he would be surprised if Raiffeisen sold its Croatian business as everything was working fine for the bank there. He added he did not see any sense in Addiko selling as he thinks it is getting ready for an IPO. He said he would be very surprised if they should split the business before that.

($1 = 0.8964 euros)

Reporting by Igor Ilic in ZAGREB, Marton Dunai in BUDAPEST, Marja Novak in LJUBLJANA and Kristi Knolle in VIENNA; Editing by Andrew Cawthorne

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