August 2, 2018 / 7:13 AM / 4 months ago

Hungary's OTP buys out SocGen in Bulgaria, Albania, more deals expected

BUDAPEST (Reuters) - Hungary’s OTP Bank OTPB.BU is buying Societe Generale’s (SOGN.PA) Bulgarian and Albanian businesses and analysts expect it to purchase the remaining Balkan units the French bank has put up for sale.

Societe Generale is selling businesses that either lack critical size or potential for synergies, opening the way for growth-hungry and well-capitalized OTP to expand in markets it considers core to its growth strategy.

“I would think this is only the first phase of the transaction,” Concorde Securities analyst Hai Thanh Le Phuong said on Thursday after the two deals were announced.

“The Serbian, Montenegrin, Macedonian and Moldavian SocGen units will probably end up in OTP’s hands as well,” she added.

OTP’s Bulgarian unit DSK Bank will incorporate Societe Generale Expressbank AD’s market share of about 6.7 percent, with the cumulative 19 percent making it a contender for the top spot on the Bulgarian banking market.

DSK, which has been profitable since OTP took it over in 2003, is Bulgaria’s second largest lender.

In addition OTP said it had acquired a majority stake in Banka Societe Generale Albania, with a 6 percent market share.

While OTP did not reveal the price paid for the two banks, it said both transactions are expected to close in the fourth quarter of 2018, pending regulatory approval.

Concorde Securities’ Le Phuong said the most value is in Societe Generale’s Bulgarian and the Serbian businesses, while the others are likely to end up as parts of a package deal.

“Phasing the deals this way is positive because the impact on capital adequacy will be less dramatic and integrating the operations is easier as well. OTP has said they were eyeing 5-6 takeover targets, with these units they would complete that.”

OTP Chief Executive Sandor Csanyi has said as many as half a dozen acquisitions were possible.

Analyst Zoltan Varga of brokerage Equilor said the news was positive for OTP’s share price, which will likely reflect the additions in the medium term.

However, shares in OTP were down 0.7 percent at 0937 GMT because of a looming global trade war, he added. OTP, which is Hungary’s most liquid stock and its most sensitive to international factors.

Reporting by Marton Dunai; editing by Jason Neely and Alexander Smith

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