When Laszlo Wolf joined OTP in 1993, the bank was controlled by the Hungarian state and undergoing a painful restructuring to prepare it for life in the private sector. Twenty-five years on, it has a balance sheet of more than €10 billion and a banking network that stretches from Russia to the Balkans.
So how did a state-run Hungarian savings bank become a regional powerhouse? Wolf says a big factor in the group’s success was its early focus on technology.
“We started actively developing our IT systems as early as 1993 and were also well ahead of the curve on ATMs and mobile banking via SMS,” he says.
He also cites management continuity – OTP has been led by chairman Sándor Csányi since 1992 – and a rigorous approach to capital and risk management as differentiating factors.
“Stability has always been key for us,” he says. “We have never needed any state help, and in 27 years we have never had a capital increase. Our growth has been entirely funded from accumulated profits.”
That is quite an achievement given that OTP’s balance sheet is now more than 100 times the size it was at the time of the bank’s IPO in 1995. Wolf says the listing process also provided valuable early lessons for the group.
“We learned from international investors about the importance of formulating a strategy, as well as setting targets and delivering on them,” he says.
OTP also benefited from Csányi’s decision to build on the bank’s retail heritage.
“We realized early on the importance of retail banking,” says Wolf. “Western banks initially focused on corporate banking and avoided the retail market, which they saw as expensive and unprofitable.
“By the time they started targeting retail customers in the mid 2000s, we already had a very strong position in the market.”
OTP’s regional expansion started in 2002, when it bought a small bank in Slovakia. A year later it outbid Erste for Bulgaria’s DSK Bank. By the time of the financial crisis, OTP had operations in six more countries, including Ukraine and Romania.
A second acquisition spree, which started in January 2014, has added a further nine banks and two countries to OTP’s regional network.
“Our priority now is to unify the group,” says Wolf. “We aren’t ruling out further acquisitions, but from next year our main focus will be on integration and improving our technological efficiency.”