Hungarian financial group OTP lowered the price asked for its Romanian subsidiary to EUR 360 million (RON 1.8 billion), significantly below the book value of shareholders' equity (RON 2.25 billion, or EUR 450 million) once circulated as the starting price for the sale negotiations but still above the EUR 300 million offer made by Banca Transilvania, according to Profit.ro. 

With a market share of nearly 3% by assets, OTP Romania is the ninth-largest bank in the country.

The sale follows the failure to improve its market share closer to the 5% target set in 2020. Furthermore, efforts to gain market share significantly depressed the bank's bottom line.

Bank's profitability ratios were well below the market's averages: 0.2% ROA (1.5% for the entire market) and 1.6% ROE (16.4% for the entire market).

OTP Romania reported RON 217 million (EUR 42 million) profit from operations and RON 35 million (EUR 7 million) net profit last year. The cost of risk quadrupled last year to RON 174 million. 

The negotiations for the sale of OTP Romania might take another two to three months even if no other bid is expected, according to sources familiar with the deal.

Raiffeisen (Romania) reportedly placed another bid, and UniCredit was interested as well. The latter, however, is unlikely to maintain its interest after it merged the local subsidiary with that of Alpha Bank of Greece. 

iulian@romania-insider.com

(Photo source: OTP Bank Romania)