Contract signed: OTP Bank acquires Uzbekistan’s Ipoteka Bank

Contract signed: OTP Bank acquires Uzbekistan’s Ipoteka Bank

After the memorandum of agreement signed in September last year, the purchase and sale contract on the privatisation of Ipoteka Bank was signed on behalf of OTP Bank by Chairman & CEO Sándor Csányi and Deputy CEO László Wolf and by Finance Minister Timur Ishmetov on behalf of the Ministry of Finance of the Republic of Uzbekistan and Deputy Prime Minister and Minister of Investments and Foreign Trade Jamshid Khodjaev on behalf of the Republic of Uzbekistan in Tashkent. OTP Bank will purchase 100% of the shares held by the Ministry of Finance of the Republic of Uzbekistan (nearly 97% total shareholding) in two steps: 75% of the shares now and the remaining 25% three years after the financial closing of the first transaction. The financial closure of the first transaction is expected to take place in the first half of 2023. Ipoteka Bank is the fifth largest bank of Uzbekistan, with a market share of 8.5 percent and a retail clientele of more than 1.6 million.

Budapest, 12 December 2022 – OTP Bank had negotiated with the Uzbek government since the end of 2020 on possibilities to participate in the privatization of the Uzbek banking sector. As a result of the negotiations, the parties signed a memorandum of agreement last autumn about the potential purchase of Ipoteka Bank and have today signed the purchase and sale contract on the terms of the transaction. The document was signed on behalf of OTP Bank by Chairman & CEO Sándor Csányi and Deputy CEO László Wolf and by Finance Minister Timur Ishmetov on behalf of the Ministry of Finance of the Republic of Uzbekistan and Deputy Prime Minister and Minister of Investments and Foreign Trade Jamshid Khodjaev on behalf of the Republic of Uzbekistan in Tashkent.

Furthermore, OTP Bank and the International Finance Corporation (IFC) have agreed to cooperate on Ipoteka Bank in the future. IFC has been providing financing and transformation support to Ipoteka Bank for several years and IFC confirmed it is committed to continuing its support and cooperating with OTP Bank as the new majority shareholder.

“We see our participation in the privatization of the Uzbek banking sector as a wonderful opportunity. Our long-term goal is to make OTP Group a key player in the Uzbek banking market. The reforms commenced in Uzbekistan afford an excellent opportunity to open a new chapter in the history of OTP Bank. In recent years, we have successfully forged a seamlessly operating international company of a significant size by European standards, from numerous members of different sizes, operating models, profitability ratios and traditions. OTP Group is currently present in 11 European countries, and we have acquired a wealth of experience during our acquisitions. The Uzbek transaction continues our expansion in a market of 34 million people. This acquisition is also a new and challenging task for us. I am confident that with our innovative products and services, we can contribute to the further dynamic development of the Uzbek economy and create significant value for OTP Bank's shareholders as well,” said Chairman & CEO Sándor Csányi in Tashkent after the signing of the contract.

In terms of assets, Ipoteka Bank is the fifth largest bank of Uzbekistan with a market share of 8.5%, a retail clientele of more than 1.6 million, 39 branches operating as regional centres, 193 customer service points, and a substantial corporate clientele. In line with the dynamic growth of the local banking sector, the assets of the bank grew spectacularly over the past three years at an annual rate of 20% on average in the loan portfolio and 24% in the deposit portfolio. The bank’s profit after tax has also exhibited continuous improvement in recent years. Ipoteka Bank has two smaller subsidiaries: Ipoteka Leasing, which is engaged in financial leasing, and Imkonsugurta, a subsidiary offering insurance service. Both subsidiaries are also part of the transaction. The financial closure of the transaction is expected to take place in the first half of 2023.

"Signing of the Sale and Purchase Agreement with OTP Bank fully corresponds to strategic initiatives of Uzbekistan. According to the Strategy of reforming the banking system of Uzbekistan for 2020-2025 years, approved by Presidential Decree ¹UP-5992 of May 12, 2020, it is planned to carry out step-by-step privatization of large state banks by strategic investors.

Arrival to the local market of such a large foreign bank as OTP Bank will contribute to strengthening of competition, improving standards of corporate governance, and improving the quality of banking services," the Minister of Finance of the Republic of Uzbekistan Timur Ishmetov noted after the signing ceremony.

“This is a significant milestone in Ipoteka Bank’s journey of growth and transformation, and we are extremely pleased with this outcome for our consumer colleagues and clients,” said Elyor Inomjonov, Ipoteka Bank’s Executive Board Chairman.“We believe that together with the OTP Bank Group Ipoteka-bank will provide employees an excellent environment to build their careers and bring in new and unique perspectives, expertise, and technologies to better serve our clients.”

OTP Group is one of the leading financial groups in the Central and Eastern European region, with an exceptional growth track record, outstanding profitability and a stable capital and liquidity position. With nearly 36 000 employees in 11 countries, the Group provides universal financial services to nearly 16 million customers. As the most active consolidator in the banking sector of the region, the Group has successfully acquired and integrated 23 banks since the early 2000s. Currently, the Bank is a market leader in Hungary, Bulgaria, Serbia, and Montenegro, and is expected to become a market leader in Slovenia soon after obtaining the necessary competition authority permits to conclude the transaction. OTP Group is headquartered in Hungary and has a diversified and transparent ownership structure. The Banking Group has been listed on the Budapest Stock Exchange since 1995.

In Uzbekistan, the development of the financial sector opens significant scope for further growth for the Group. The Uzbek banking market offers numerous new business opportunities, with both the clientele and customer needs expected to grow strongly in a dynamic economy that is becoming increasingly open thanks to recent reforms.