OTP snaps up Slovene bank, plans merger to create market leader

OTP Bank has been cleared by Slovenian Competition Protection Agency (AVK) to acquire Nova Kreditna Banka Maribor (NKBM), Slovenia’s second largest bank, the Hungarian bank announced on Wednesday 1 February. 

The acquisition of all NKBM’s equity, which has been valued by media outlets at roughly EUR 1bn, was approved the previous day.

The Hungarian bank said the purchase price settlement and share transfer will take place in the coming days, following the final approval from AVK, after the European Central Bank (ECB) waved through the deal in September 2022.

Purchase part of a wider expansion into Slovenia

OTP announced its plan to acquire 100% of NKBM and its subsidiaries in May 2021. NKBM is 80% owned by affiliates of Apollo Global Management affiliates, while the European Bank for Reconstruction and Development (EBRD) holds the remaining 20%. 

NKBM was bought by Apollo and the EBRD in mid-2016 for EUR 250mn after Slovenia bailed out its banks during the 2013-14 financial crisis and committed to privatizing them.  

This acquisition is part of OTP Bank’s plan to increase its presence in Slovenia, where NKBM provides services to both the retail and corporate segments.

After finalising its NKBM purchase, OTP plans to merge its new acquisition with SKB, a Slovenian bank it acquired in 2019, and create the largest bank in Slovenia in terms of loans and deposits. OTP will focus on providing quick credit products to SMEs and to support local businesses in their growth and expansion into foreign markets through mutually beneficial partnerships.

Following the merger between NKBM and SKB, there will be two approximately equal players in the market, the other being NLB, which is currently Slovenia’s leading bank. 

OTP also has construction plans

In addition to its stake in the banking sector, OTP also has a presence in the Slovenian real estate market. The Hungarian bank earlier acquired the commercial part of the project for the new Ljubljana passenger terminal ‘Emonika’, through Mendota Invest.

OTP has plans to build a hotel, apartments, offices, and a shopping centre with approximately 85,000sqm leasable area, which area currently awaiting approval from the Slovenian Ministry of Natural Resources.

Purchase required clearing of regulatory obstacles

Its latest acquisition faced a series of regulatory hurdles, as OTP notified AVK of the market concentration on July 1, 2021, and was initially expected to close the transaction by the end of June 2022, only for the process to be prolonged due to regulatory procedures.  

The Slovenian regulator also sought additional documents and explanations over concerns about the impact of the acquisition on competition in the banking market.  

There have also been also reports of misgivings at the ECB regarding the acquisition due to OTP’s exposure to Russia and Ukraine, which has had a negative impact on its bottom line. In March 2022, in the weeks after Russia invaded Ukraine, OTP Bank stopped financing its Russian subsidiary OAO OTP Bank.

When this latest deal is finalised, OTP Group subsidiaries will operate in eight countries in Central and Eastern Europe, as the new entity joins the Hungarian bank’s portfolio of DSK Bank in Bulgaria, OTP banka Hrvatska in Croatia, OTP Bank Romania in Romania, OTP Banka Srbija in Serbia, OTP Banka Slovensko in Slovakia, OTP Bank JSC in Ukraine and Crnogorska komercijalna banka in Montenegro.