Tashkent, Uzbekistan (UzDaily.com) -- Hungarian OTP Bank intends to acquire a controlling stake in the Uzbek Ipoteka Bank.

The agreement on the planned acquisition of JIpoteka Bank was signed in Tashkent at an international forum in Uzbekistan dedicated to economic reforms in the country by Deputy Chairman of the Board Laszlo Wolf and Managing Director Gabor Kolich on behalf of OTP Bank and Minister of Finance of the Republic of Uzbekistan Timur Ishmetov on behalf of the Government Uzbekistan.

The parties are expected to agree on the final terms by the end of the year. Ipoteka Bank is the fifth largest bank in Uzbekistan with a market share of almost 9 percent and over 1 million retail customers.

Since the end of 2020, OTP Bank has been negotiating with the Government of Uzbekistan on the possibilities of participating in the privatization of Uzbek banks, and today, as a result of these negotiations, an Agreement was signed. Taking into account the advanced stage of negotiations, the parties intend to conclude a final purchase and sale agreement, in which all conditions for the purchase of Ipoteka Bank will be discussed, by the end of this year.

In terms of total assets, Ipoteka Bank is the fifth-largest bank in Uzbekistan. It has a market share of nearly 9 percent, serves over 1.2 million retail and large corporate customers, has 39 branches operating as regional centers, and 434 customer service points. Over the past three years - in line with the dynamic growth of the local banking sector - the bank’s portfolio has grown significantly: loans and deposits are growing by an average of 34% and 18% per annum, respectively, and profits after taxes have been growing steadily in recent years. Ipoteka Bank has two small subsidiaries - Ipoteka Leasing, which deals with financial leasing, and Imkonsugurta, which deals with insurance, which will also be covered by the deal.

The signing of the Memorandum on the acquisition of a controlling stake took place within the framework of a two-day international forum organized by the Government of Uzbekistan called "Uzbekistan: Achievements of Economic Reforms and Prospects." The forum was held with the support and participation at a high level of the World Bank and the Asian Development Bank, and among the participants were representatives of the Government of Uzbekistan, international business and financial circles, international and regional multilateral development institutions, politicians, non-governmental organizations and international media.

“With its population of 34 million, low penetration of bank loans and ongoing reforms, Uzbekistan offers OTP Bank significant growth opportunities, so we consider today’s 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. I am convinced that the international banking experience that OTP Group has accumulated in the course of its regional expansion in recent years can provide Ipoteka Bank and its clients with numerous advantages,” said Deputy General Director Laszlo Wolf in Tashkent after signing the document.

“The signing of agreements with OTP Bank is fully consistent with the strategic initiatives of Uzbekistan. According to the Strategy for reforming the banking system of the Republic of Uzbekistan for 2020-2025, approved by the Decree of the President of the Republic of Uzbekistan from 12 May 2020 No.UP-5992, it is planned to carry out a phased privatization of large state-owned banks by strategic investors. The arrival of such a large foreign bank as OTP Bank on the local market will enhance competition, improve corporate governance standards and improve the quality of banking services,” said Minister of Finance of the Republic of Uzbekistan Timur Ishmetov following the signing ceremony.

Elyor Inomjonov, Chairman of the Board of Ipoteka Bank, said: “After several years of transformation and significant growth, which has made Ipoteka Bank one of the leading banks in Uzbekistan, this acquisition will be another strategic milestone in our growth path. We are encouraged by the opportunities that privatization by a strategic investor can provide to clients and employees of our bank. We are confident that together with OTP Bank Group, Ipoteka Bank will provide an even higher quality of service for its clients, and the entire banking sector can benefit from this deal thanks to new technologies, products and management experience.”