OTP BANK WEAKENS CORPORATE BUSINESS

By the end of last year, the crisis and deteriorating access to capital forced many Slovak banks to fall back on safety measures. And not all of them were only preventive or for salvaging purposes. OTP Bank decided to change its strategy in Slovakia. After its Hungarian mother company removed OTP from the market due to the crisis, it announced its ambitions to increase OTP’s market share in Slovakia. But the reality seems to be different. In those areas where the bank was one of the strongest in the market, it’s voluntarily surrendering its position. Changes in OTP Bank Slovakia began at the end of last year. The bank is transforming its structure from the inside out. It will consolidate the corporate and retail departments, creating a single division. Simultaneously, it is weakening its shares with entrepreneurs. OTP Bank spokesperson Tatiana Jonáková said that this strategy is immutable. The dampening of the corporate portfolio, which is less profitable for the bank, has been planned since the beginning of the year, according to Jonakova. This, even though the decision to sell the Slovak bank should have been made a long time ago. The bank has not been as profitable for Hungarian shareholders as the investments in the east which OTP Bank Nyrt had had their eye on. But there has not been a buyer for a long time, especially due to the fact that a short time beforehand the similarly major Istrobanka was sold in Slovakia. And of course the crisis caused the lack of free capital and thus the sale of OTB was halted. According to Trend, at the end of last year OTP stopped to renew current business accounts and was not providing short-term business loans either. All the bigger loans are approved by the bank’s Hungarian headquarters. More banks initiated more strict loan-approval criteria at the conclusion of 2008. And now OTP is even discarding those areas in which it had been strong, such as agriculture. The directors of the regional central branches received instructions in November of last year not to renew or offer new loans to cover agricultural donations. Clients were supposed to get this information in an appropriate manner and with a sensitive approach. In the agro area the bank took pride in a 20% share and second place in the Slovak market.