Success and Responsibility

OTP Bank is the largest commercial bank in Hungary, and OTP Group is one of the largest independent financial services providers in Central and Eastern Europe. Its Croatian subsidiary is the fourth largest bank in that country with a potential for further growth.

“At our closing event in March 2005, when OTP Bank took over Nova Banka and entered the Croatian market, the Chairman and CEO of OTP Bank, Dr. Sándor Csányi stated that OTP Group’s goal was to achieve a 10% stake on the Croatian market. Since then, the economy and the financial sector in the country followed the global trends through versatile developments, challenges and recession. We have continuously strived in two directions: growing organically by expanding our network from regional to nation-wide across Croatia and investing in our continuous development,” the President of the Management Board at OTP banka Hrvatska, Balázs Békeffy, recalls to Diplomacy&Trade.
Simultaneously, OTP Bank kept a keen eye on the banking sector and explored various acquisition opportunities. However, almost a decade passed until they really had the opportunity to undertake the first new acquisition. “Today, we have met the original expectations. Having become the fourth largest bank in Croatia with over 10% of the market share is a success, but also a large responsibility,” he adds.

Respected financial group
In Croatia, Banco Popolare (BPC) and Splitska banka have also been acquired by OTP. When we ask how much these purchases have contributed to the overall OTP results in Croatia, the President of the Management Board says that in a fairly developed and saturated market with a population of only somewhat over four million, acquisitions are crucial for considerable growth. “We managed to complete both integrations within record time and with considerable success by growing our market shares in several key segments. The integration of Splitska banka was the historically largest integration in Croatia, we succeeded in performing it as planned and with commendations by all key stakeholders. With both integrations – of Splitska and BPC, we managed to fully utilize the best qualities of the acquired banks while maintaining a sharp and successful strategy as well as the business style and values of OTP banka. We had organizational stamina and business strength for a very speedy post-integration recovery, which resulted in exemplary growth of market stakes.” Besides bank acquisitions, over the years, OTP Bank has successfully expanded its financial group in Croatia, covering leasing, investment funds, insurance, real-estate management and other services. “Today, OTP Group in Croatia is a respected financial group attractive to our clients and a respected partner to all other stakeholders,” he points out.

Attractive financing
Many of the OTP branches in Croatia can be found on the Adriatic coast, which is not only frequented by Hungarian tourists but also likely to have greater economic growth. According to Balázs Békeffy, “OTP banka today has a strong dominance along the Adriatic coast, which comprises our traditional regions. Definitely, it is a great advantage doing business in an economically prosperous region, although, it has specific challenges, since the economic development along the coast dominantly relies on tourism.” He believes that to achieve a healthy portfolio, they must be active in financing multiple industries and therefore their goals are tied to spreading successful operations nation-wide. So, the bank is active in providing attractive financing in numerous sectors, from infrastructure and greenfield investments to agriculture and SME sector. “As the fourth largest bank in the country with a heavyweight tradition in retail, our specific challenge is to lead in innovation and provide technologically advanced products and services to our clients and to raise our attractiveness related to customer experience,” he adds.

A diverse group in tough competition
Since December, OTP Group is present in twelve countries, following the purchase of SKB Banka in Slovenia (see news on page 6). “We are very proud of being a part of the fastest growing financial group in this part of Europe. It gives us encouraging confidence and great opportunities to grow together with our sister companies in other countries. The best asset of such a group is in its diversity; we can constantly learn from one another, exchange experiences and mutually inspire driving the progress which is demanded by technological development and societal trends. We are happy to enjoy the support and trust by our owners and receive regular commendations for our achievements,” the President of the Management Board highlights. Conditions in specific county markets differ, while the operations are influenced by particular market demands and potentials as well as by the size and market position of each bank. “We are happy to fulfil our objectives and the expectations by the shareholders by being among the most successful banks in the Group, having been the second largest subsidiary contributor to the Group’s profit. In the first nine months OTP banka Hrvatska recorded HUF 26.5 billion adjusted after-tax profit, which is a 27% increase on a yearly basis,” he adds.
OTP’s share on the Croatian bank market is somewhat over 10%. Balázs Békeffy says that further consolidation can be expected on Croatian banking market and OTP banka always carefully monitors all the opportunities. “However, at this moment, we are ambitious to develop our digital capabilities, focusing on product development and servicing our clients with great customer experience. It is a tough competition which demands agile transformation to be among the first to offer the clients accessible and individualized products and tailor-made financial advice. This is our major challenge for another exciting year. I would like to underline that our success was possible only because of my brilliant and diligent colleagues. I am happy and proud to have a chance to share my working time with a great team who exceeds expectations and makes everything possible.”

High expectations
International markets are bracing themselves for a global downturn or even a recession in some key markets. Balázs Békeffy is certain that it will affect the Croatian economy, “which I believe is much more stable now than during the crisis eleven years ago. Exports increased significantly while those companies that did not have the right business model went through restructuring or ended in bankruptcy. The OTP banka has a conservative risk policy and its capitalization and liquidity are high which makes it quite resilient for future challenges. However, the good news is that all major Croatian macroeconomists and also the central bank have high expectations for the upcoming year, and I have high hopes that their prognosis will come true.”