Hungary’s OTP To Buy Uzbekistan’s Ipoteka Bank

Multi Billion Euro Deal First Western Acquisition Of An Uzbek Bank 

The Uzbek government has agreed to sell Ipoteka Bank to Hungary’s OTP Bank in what will be the most significant deal in Uzbekistan’s financial sector since President Shavkat Mirziyoyev started to open the country to foreign investors in 2016.  Neither the Uzbek government nor OTP Bank gave any more details, although Uzbek officials have previously said that they wanted to sell a 75% in Ipoteka Bank.

In a statement, OTP said that it had “signed a non-binding Memorandum of Agreement regarding the potential acquisition of the majority stake of Ipoteka” and that deal is likely to “conclude before the end of the year”.

Uzbekistan has said that it is keen to open up and modernize its financial systems. The government has been encouraging state-owned banks to find Western stakeholders and to apply for credit ratings. It has also encouraged foreign banks to set up subsidiaries in Uzbekistan. Georgia’s TBC Bank and Kazakhstan’s Halykbank have set up Uzbek operations, but OTP Bank will be the first Western bank to set up in Uzbekistan.

Ipoteka Bank is the fifth largest bank in Uzbekistan with assets of 34 trillion Soum (US$3.2 billion), with about an 8.5% share of the market. It has 39 branches and around 4,500 staff. Around 40% of its loans are in retail mortgages. Like other banks in Uzbekistan, Ipoteka’s assets have grown by around 600% since 2016 when Mr Mirziyoyev took over from the reclusive Islam Karimov as Uzbekistan’s president. In February, Mr Mirziyoyev said that he wanted to speed up the modernisation process, pledging to sell 75% of all the state assets by 2025.

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