Ipoteka-bank

As of September 2021, Mortgage Bank is the fifth largest bank in Uzbekistan with a market share of almost 9 percent and serves more than 1.2 million retail and large corporate clients, has 39 branches functioning as regional centers, as well as 434 customer service points.

History

2022

Signing an agreement on the purchase by Hungarian OTP Bank of a 100% public stake in Ipoteka Bank

On December 12, 2022, information appeared that Hungarian OTR Bank and the Government of Uzbekistan signed a purchase and sale agreement on the privatization of Ipoteka Bank. The signing of the document took place in Tashkent. The amount of the transaction was not disclosed.

In accordance with the agreement, OTP Bank will acquire 100% of the shares owned by the Ministry of Finance of the Republic of Uzbekistan (almost 97% of the total stake) in two stages: 75% of the shares immediately and the remaining 25% - three years after the closure of the first transaction, which is expected to occur in the first half of 2023.

Hungarian OTR Bank buys 100% of the state stake in Uzbekistan's Ipoteka Bank
Photo: yandex.ru

OTP Bank has been negotiating with the Government of Uzbekistan since the end of 2020 on the possibility of participating in the privatization of the Uzbek banking sector. As a result of negotiations in the fall of 2021, the parties signed a memorandum of agreement on the potential purchase of Ipoteka Bank, and in December 2022 they signed a purchase and sale agreement on the terms of the transaction.

In addition, OTP Bank International Finance Corporation and (IFC) agreed on cooperation in relation to bank Ipoteka-Bank in the future.

As noted, IFC provided financing and support in the transformation of Ipoteka Bank for several years. The Corporation intends to continue its support and cooperation with OTP Bank as a majority shareholder.

In terms of assets, Ipoteka-Bank is the fifth largest bank in Uzbekistan with a market share of 8.5%, a retail clientele of more than 1.6 million people, 39 branches acting as regional centers, 193 customer service points and a significant corporate clientele. In line with the dynamic growth of the local banking sector, the bank's assets have grown at an impressive rate over the past three years by an average of 20% per year in the loan portfolio and by 24% in the deposit portfolio. The bank's after-tax profits have also shown a steady improvement in recent years.

Ipoteka-Bank has two smaller subsidiaries that have also become part of the transaction:

• Ipoteka Leasing, engaged in financial leasing,
• Imkon Sugurta, offers insurance services.

According to the Chairman of the Board and Chief Executive Officer of OTP Bank, Sandor Chanyi, the bank sees its participation in the privatization of Uzbekistan's banking sector as a great opportunity. The long-term goal of the organization is to make OTP Group a key player in the banking market of Uzbekistan.

"In recent years, we have formed from many participants of different sizes, operational models, profitability ratios and traditions an efficient international company of significant the European size by standards. As of December 2022, the OTP Group is represented in 11. the European countries The Uzbek deal continues our expansion in a market of about 36 million people. This acquisition is also new and challenging for us. I am confident that with our innovative products and services, we will be able to contribute to further dynamic development economy of Uzbekistan and create significant value for OTP Bank shareholders, "added Sandor Chanyi in Tashkent after signing the agreement.

The signing of the purchase and sale agreement with OTP Bank fully complies with the strategic initiatives of Uzbekistan.

Thus, according to the Minister of Finance of the Republic of Uzbekistan Timur Ishmetov, the arrival on the local market of such a large foreign bank as OTP Bank will contribute to strengthening competition, improving corporate governance standards and improving the quality of banking services.^[1]

OTP postpones the purchase of 75% in the bank due to the special operation of the Russian Federation in Ukraine

In April 2022, the Hungarian OTP Bank appealed to Uzbekistan with a request to postpone the purchase of 75% in Ipoteka Bank. The portal Spot.uz writes about this with reference to the Bloomberg Law message, which, in turn, quotes the general director of the Hungarian bank Sandor Chanyi.

The reason for the postponement, the interlocutor of the publication called the hostilities in Ukraine and the uncertainty caused by them. According to him, the deal, announced in September 2021, was at the final stage.

"The purchase was ready for signing when war broke out in Ukraine," Chanyi said. Since February 24 - the day the special operation began in Ukraine - OTP Bank shares collapsed by 30%. The Hungarian side applied for a delay of 2 − 3 months to clarify the situation.

2021: Plan to acquire a 75% stake in Ipoteka Bank by Hungarian OTP Bank

within Hungarian OTR Bank the framework of privatization, Mortgagebank"-" will become the owner of a 75% state stake in this bank. This was announced on September 29, 2021 by Deputy Prime Minister, Minister of Economic Development and Poverty Reduction Uzbekistan Jamshid Kuchkarov. According to him, the deal is planned to be fully completed within two months. The amount of the transaction was not disclosed.

Hungarian OTR Bank will buy 75% of the state stake in Uzbekistan's Ipoteka Bank
Photo source: yandex.by

I will tell you a small story of the privatization of this bank. First, we started working with IFC (International Finance Corporation), which represented us to potential investors. After that, the Hungarian OTP Bank came to Uzbekistan. We will sign one document and within two months we will complete the deal, reported by Jamshid Kuchkarov.

The Deputy Prime Minister noted that other banks will be privatized according to a similar scheme - "transformation - preparation for sale - privatization."

Jamshid Kuchkarov recalled that as of September 2021, independent members work in the supervisory boards of state banks.

That's good for privatisation, too, because we don't need 10 state-owned banks. Therefore, we plan to use the experience of privatization of Ipoteka-Bank in the privatization of Uzpromstroybank, said Jamshid[2].

Over the past three years - in line with the dynamic growth of the local banking sector - the bank's portfolio has increased significantly: loans and deposits grow by an average of 34% and 18% per year, respectively. Ipoteka-Bank has two small subsidiaries - Ipoteka Leasing, which is engaged in financial leasing, and Imconsugurta, which is engaged in insurance - they will also be covered by the transaction.

With a population of 34 million people, low penetration of bank loans and ongoing reforms, Uzbekistan offers OTP Bank significant growth opportunities, so we consider the signing of the agreement an important step. I believe that our participation in the privatization process can serve as a good basis for OTP Group to become a long-term foreign operator in the banking market of Uzbekistan due to the significant potential for economic growth, "said Laszlo Wolf, Deputy Chairman of the Board of OTP Group.

The arrival on the local market of such a large foreign bank as OTP Bank will contribute to increased competition, increase corporate governance standards and improve the quality of banking service, "said Uzbekistan Finance Minister Timur Ishmetov.[3]

2019: Bank privatisation preparations begin

Preparations for the privatization of Ipoteka Bank began in 2019. Then he received $35 million for transformation from the International Finance Corporation, as well as the first credit rating from Fitch.

Notes