Hungarian OTP Bank is preparing to leave Russia

Hungary’s largest bank, OTP Bank Nyrt, is considering options for exiting the Russian market, Bloomberg reports.

“Given the strategic interest in the Baltic States and the modest progress in extracting additional dividends in Russia over the past year, OTP has begun a review of its strategy towards Russian business, including a potential full withdrawal from the Russian market,” Peter Chani, CEO of OTP Group, told Bloomberg. The review is expected to be completed before the end of the year, resulting in a decision that maximizes long-term value for shareholders, with particular reference to the success of our group’s international expansion strategy.

The agency notes that “the Hungarian bank is now under scrutiny by regulators” as it plans to acquire Estonian bank Luminor Bank AS, which is also represented in Lithuania and Latvia. The deal could be one of OTP Bank’s biggest acquisitions and allow it to expand its presence in the eurozone.

OTP said the bank had already scaled back operations in Russia and found no violations of international sanctions. Financial regulators in Latvia and Lithuania have raised concerns about OTP’s activities in Russia, with Estonian Finance Minister Jürgen Ligi calling it a “shame.” Estonian regulator Finantsinspektsioon said it was looking into OTP’s activities in Russia. “OTP Group’s activities in Russia ... will be one of the key aspects in assessing the possible acquisition of Luminor Bank,” the ministry said in a statement.

Eugene Hvostik