OTP Bank set to acquire majority stake in the Uzbek Ipoteka Bank

04/10/2021 - 09:51 2110

An agreement regarding the potential acquisition of Ipoteka Bank (“Memorandum of Agreement”) was signed in Tashkent, at the Uzbek Government’s international forum on economic reforms in the country, by Deputy CEO László Wolf and Managing Director Gábor Kolics on behalf of OTP Bank, with Finance Minister Timur Ishmetov representing the Uzbek Government. The parties are expected to agree on the final terms and conditions by the end of the year. Ipoteka Bank is the fifth largest bank in Uzbekistan with a market share of nearly 9 per cent and more than 1.2 million retail clients.

Since late 2020, OTP Bank has been negotiating with the Uzbek Government on the opportunities for involvement in the privatisation of the Uzbek banking system, and the Memorandum of Agreement was signed today as a result of these discussions. The terms and conditions of the purchase of the bank will be stipulated in the final sale and purchase agreement, which the parties are set to conclude before the end of the year thanks to the advanced stage of the negotiations.

In terms of its total assets, Ipoteka Bank is the fifth largest bank of Uzbekistan. Its market share is nearly 9 per cent, with over 1.2 million retail clients and a large corporate clientele, 39 branches functioning as regional centres, as well as 434 customer service points. Over the last three years—in line with the dynamic growth of the local banking sector—the bank’s portfolios have significantly increased, with loans and deposits growing on an average annual rate of 34% and 18%, respectively, and its after-tax profit has steadily improved in recent years. Ipoteka Bank has two smaller subsidiaries—Ipoteka Leasing, focusing on financial leasing, and Imkonsugurta, dealing with insurance—which are to be covered by the transaction.

The signing of the Memorandum on the acquisition of a majority stake took place as part of the two-day international conference hosted by the Uzbek Government entitled “Uzbekistan: Achievements of Economic Reforms and Outlook”. The forum was held with the support and high-level participation of the World Bank and the Asian Development Bank, and the attendees included representatives of the Uzbek Government, international business and financial communities, international as well as regional multilateral development institutions, policy-makers, non-governmental organisations and international media.

“With its population of 34 million, low level of bank credit penetration and reforms undertaken, Uzbekistan offers OTP Bank a significant opportunity for growth, therefore we consider today’s signing of the Memorandum of Agreement an important step. I believe that our involvement in the privatisation process can serve as a good basis for OTP Group to become a long-term foreign operator on the Uzbek banking market thanks to the considerable growth potentials in the economy. I am convinced that the international banking experience that OTP Group has accumulated through its regional expansion in recent years can provide Ipoteka Bank and its clients with numerous benefits,” said Deputy CEO László Wolf in Tashkent after the signing of the document.

"Signing of the Memorandum of Agreement with OTP Bank fully corresponds to strategic initiatives of Uzbekistan. According to the Strategy of reforming the banking system of Uzbekistan for 2020-2025 years, approved by Presidential Decree ¹UP-5992 of May 12, 2020, it is planned to carry out step-by-step privatization of large state banks by strategic investors.

Arrival to the local market of such a large foreign bank as OTP Bank will contribute to strengthening of competition, improving standards of corporate governance and improving the quality of banking services," the Minister of Finance of the Republic of Uzbekistan Timur Ishmetov noted after the signing ceremony.

Ipoteka-bank’s Executive Board Chairman Elyor Inomjonov said, “After several years of transformation and significant growth establishing Ipoteka-bank as one of the top banks in Uzbekistan, this acquisition will be another strategic milestone in our growth journey.

We are excited by the opportunities the privatization by a strategic investor can bring to our bank's clients and employees. We are confident that together with the OTP Bank Group Ipoteka-bank will deliver even better service quality for the clients and the whole banking sector may benefit from this transaction through new technology, products and management expertise.”

Information service of the

Ministry of Economic Development and Poverty Reduction