News - Hungary`s OTP almost bought a bank - Csányi
Hungary's OTP Bank is well-capitalised; it was one of the most profitable banks in Europe last year and it should post a profit of HUF 150 billion in 2009, Chairman-CEO Sándor Csányi told InfoRádió. He also said that while OTP has planned to acquire a bank it has finally chosen not to go forward with the deal. OTP is to hold its annual general meeting today.
There is a single point left to agree on and OTP can seal an EUR 200 million subordinated loan from the European Bank for Reconstruction and Development (EBRD), Csányi said. The money will be used to boost lending, he added.
OTP's Board of Directors is proposing the AGM not to pay dividend on 2008 profits and use the income to enhance the bank's capital position. Csányi said shareholders care less about the bank's income and find it more important to have a stake in a liquid bank that is able to manage risks.
While OTP was one of the most profitable banks of Europe last year, rising costs of risk are likely to hit its profit this year. Csányi expects HUF 150 bn net income this year against HUF 218 bn posted in 2008 therefore OTP needs reserves to handle unexpected situations.
He also noted OTP has almost acquired a bank but then it decided to pull out because the deal would have carried a bad message to shareholders.
He reiterated that the Board's proposals to the AGM would ensure a proper defense against creeping takeover, but he is not certain shareholders will approve. Regarding a share exchange deal with MOL, Csányi said it was comforting to know that 10% of OTP's shares are in friendly hands.
He reiterated that OTP does not need state help, because its capital adequacy ratio is good and it can manage liquidity issues by itself.
Csányi said the government should primarily help businesses not banks as they are the ones that are in a difficult position as lending was scaled back.
He said the programme of the new, Gordon Bajnai-led government was a bold crisis management package and that the cabinet does see the real situation of the country and has a realistic outlook.
“Regarding the viability of the crisis management programme it's not enough to watch the mere numbers. The investors need to be convinced that the trend will be sustained and the country can remain solvent also in the long run," Csányi emphasised.
The Bajnai package is strong on the fiscal side and gives Hungary the chance of meeting its pledge taken to the IMF regarding the budget deficit and also helps restore confidence that the country can avoid sovereign default, he added.
OTP Bank's analysts forecast EUR/HUF to be around 285 by the end of the year and Csányi said it was crucial that investors believed the forint will not weaken considerably from that level.
Source: www.portfolio.hu
