Hungarians plan to buy Bulgaria’s last state bank

SOFIA (Reuters) – Hungary’s OTP Bank, which placed the highest cash bid for DSK, Bulgaria’s sole remaining state bank, said yesterday it planned to invest over $330 million in modernizing the Balkan state’s bank if awarded the tender. Chairman and CEO Sandor Csanyi reiterated his belief that OTP would close a deal for buying DSK, which Hungary’s largest commercial bank eyed as part of regional expansion plans. «We meet all requirements in the tender. We placed the higher offer, and we await the decision (on the DSK winner) with calm optimism,» Csanyi told a news conference in Sofia. Bulgaria received two final bids for 100 percent of its second largest bank on April 10, with OTP offering 311 million euros ($341 million) and Austria’s Erste Bank offering 293 million euros. The Bank Consolidation Company (BCC), in charge of state bank sell-offs, said last week it would name the winner in early May and sign a deal by month’s end. The Finance Ministry has said that the highest bid would not necessarily win the tender. Both offers have exceeded the pro-Western government’s expectations of up to 240 million euros for DSK, formerly called State Savings Bank, whose sale is part of structural reforms in one of the poorest candidates for European Union entry. «We will apply our experience in transforming DSK by introducing new products and new technology,» said Csanyi. OTP would invest 600 million levs ($338 million) in DSK over the next five years to modernize it and boost its competitiveness. DSK, which has over 2.5 million clients and over 300 branches in the country of 8 million people, raised its net profit to 38.3 million levs ($21.6 million) last year from 23.98 million levs net in 2001, according to preliminary central bank data. Its assets amounted to 2.029 billion levs at end-2002, out of 14.557 billion levs’ worth of assets for the whole of the country’s banking system. OTP, which has said it aimed for a 21.7 percent share in Hungary’s banking market by assets for this year, saw its consolidated after-tax profit rising to 55 billion forints ($245.6 million) last year from 46.4 billion in 2001.