Hungarian OTP steps up acquisitions with Alpha Bank Albania agreement
The acquisition by OTP Bank Nyrt. of the Albanian unit of Alpha Services and Holdings SA is the latest step in the Hungarian bank’s aggressive expansion strategy in Central and Eastern Europe.
The agreement values Alpha Bank Albania SHA at 55 million euros, or a price / book value ratio of 0.74x. Alpha Bank Albania is the eighth largest lender in the country with a 5% share of assets, OTP said.
This could be OTP’s third bank acquisition of the year. In May, it agreed to acquire Nova Kreditna Banka Maribor dd from private equity firm Apollo Global Management and the European Bank for Reconstruction and Development. He also signed a non-binding memorandum of understanding with Uzbekistan Ministry of Finance to buy Ipoteka-Bank Toshkent Sh, the country fifth lender. The bank plans to finalize the terms of the deal by the end of 2021.
OTP’s acquisition campaign began in 2014 when it declared its goal “to become the best performing universal banking group in Central and Eastern Europe”. The group is moving forward on a relatively modest investment in China, Laszlo Bencsik, deputy managing director and chief strategy and finance officer, said on an earnings conference call in November. He added that OTP is continuing to explore acquisition opportunities in Russia in response to reports that it is considering a deal for Home Credit & Finance Bank LLC of Russia-based PPF Group NV.
The bank has a large and growing presence in the EEC region. Hungary is its largest market, accounting for 37% of its loan portfolio on a pro forma basis in the third quarter, followed by Bulgaria, Croatia and Serbia.
Its market share in Slovenia could reach almost 30% thanks to the acquisition of Nova KBM, while the entity that will be created from the Albanian acquisition is expected to have a market share of around 11% in the country. .
The mergers and acquisitions strategy has helped OTP accelerate asset growth, from 11 billion Hungarian forints in 2014 to 22.7 billion forints in the last quarter, according to data from S&P Global Market Intelligence. Over the first nine months of 2021, the group’s operating expenses are on the rise 6.1% year over year, but this was offset by a 12% increase in total income, with most after-tax affiliate profits improving on a quarterly basis.
For Greece-based Alpha, the deal is part of its efforts to increase its capital and maintain a level above the minimum requirements. The bank has made liquidating non-performing exposures a priority, with the last sell-off in October and more expected imminently.
Alpha said in its third quarter earnings report that it expected to achieve risk-weighted asset relief of € 400 million from the sale of the Albanian unit. He was advised on the transaction by Rothschild & Co, UniCredit, White & Case and Kalo & Associates.
As of December 8, US $ 1 was equivalent to 323.17 Hungarian forints.