ECONOMY

DSK acquisition talks

BUDAPEST – Hungary’s OTP Bank was to begin talks with Bulgarian officials on the purchase of DSK, Bulgaria’s second-biggest bank, over the weekend and a contract could be signed next week, OTP said on Saturday. «We have submitted a fair price bid after accepting contract conditions required,» Chairman and CEO Sandor Csanyi told journalists. «We are ready to sign it within a week.» Csanyi said he hoped the transaction, which would signify that Bulgaria’s fledgling privatization program is moving forward, would not fail due to what he called unfounded reports in the Bulgarian press painting a gloomy picture about OTP’s financial strength and plans. Bulgaria’s press said OTP, Hungary’s largest commercial bank, was undercapitalized for the deal and its ownership structure was not transparent. Bulgaria announced on Friday that OTP had offered 311 million euros ($334.6 million) for 100 percent of DSK. The only other bidder, Austria’s Erste, had offered 293 million euros. But Bulgaria is also still in talks with Erste, Wolf added. OTP Deputy CEO Laszlo Wolf said the price should be the decisive factor at the one-round tender. Bulgaria has pledged to announce the tender result by tomorrow. A tender for the sale of Romania’s Banca Comerciala Romana (BCR) foundered late last year as the bidders, a consortium including OTP and France’s Eulia were disqualified. The decision followed criticism on the privatization in the Romanian press. Bulgaria and Romania expect to join the European Union in 2007. Hungary will hold a referendum on Saturday on joining the more developed Western bloc together with nine others, mostly eastern European, on May 1, 2004. «In Romania, it was clear from the beginning that the privatization got onto a political track,» Csanyi said. «In Bulgaria we have experienced a very fair and objective treatment in the procedure,» he added. Csanyi said Bulgaria would hopefully not extend the tender after the negative and unfounded press reports. Wolf said the transaction would not be a serious burden for OTP, which had a market capitalization of 2.6 billion euros and consolidated after-tax profits of 249 million euros in 2002, and sees after-tax earnings of more than 250 million euros for 2003. He also denied reports that OTP would sack a big part of DSK’s employees, saying it planned to double DSK’s business volume without any change to the staff of some 4,900. Csanyi denied that OTP’s ownership was not transparent, saying that most of the shares were held by big Western institutional investors and investor confidence was proved by a tenfold rise in the share price in dollar terms in the past few years. «Euromoney granted us the title of the best-developing bank in Central Europe in the past decade,» he said, adding that OTP last month became the first bank from eastern Europe to be invited to join the Institut International D’Etudes Bancaires, a powerful lobby of 55 big European banks.