It is even more true today that there is no trouble with OTP Bank than it was two or three months ago: the crisis could end in 2011 and the bank does not see any need to take extraordinary measures, rather it is thinking about making transactions, CEO Sandor Csanyi said in an interview published in the latest issue of news weekly Figyelo on Thursday.
Mr Csanyi said he trusted less than earlier that the OTP group would be able to generate a EUR 2bn profit in 2010 as earlier thought, but he added that the bank’s 2008 ROE and ROA would put it in the top 5pc of banks on a global scale.
“We started dealing with liquidity management much earlier than the Hungarian or the European bank sector,” he said, citing OTP Bank’s sale of its insurance arm OTP Garancia.
From the point of view of liquidity, one of the difficulties the bank faced was the freezing up of the FX swap market in October and November, Mr Csanyi said. Now the market is “operating acceptably, though it is not cheap,” he added.
OTP Bank can promise an acceptable profit in 2009, though investors today are not interested first and foremost in profit, he said.
Mr Csanyi denied that Russia’s Sberbank had approached OTP Bank with an offer to buy it. He said the bank had negotiated on a possible cooperation with Polish peer PKO BP, but the talks were broken off because of the crisis.
Speaking about the bank’s Ukrainian unit, Mr Csanyi said the economic situation in Ukraine is not as bad as it appears. The unit is “the best in Ukraine” in terms of management and portfolio. Even in a worst-case scenario, it would take USD 100m-150m to solve any problems the unit might have, he added.
There is no reason for OTP Bank to worry about its units in Russia and Bulgaria, he said, adding that their Romanian market was yet insignificant. “We can handle the risk everywhere.”
Fear of defaults warranted only for “significantly weaker” forint rate
The forint would have to weaken much more before fears of mass defaults on foreign currency denominated loans are warranted, Mr Csanyi said. He would not reveal at what rate the fears for mass FX loan defaults would be justified, but he said, “We are talking about a rate significantly lower than today’s rate, which we exclude.”
The forint has weakened sharply over the past days, passing 300 to the euro, a key psychological barrier, on Tuesday. On Wednesday, it reached a fresh all-time low of 304.
In some cases OTP Bank should ask clients to put up additional collateral, and it has already informed these clients about this, Mr Csanyi said. Still, the bank has not yet asked anybody to put up more collateral. He noted that collateral on OTP Bank’s loans reaches 60-70pc, so the bank cannot be compared with ones in the US, where the rate is only about 10pc.
OTP Bank is ready to talk with borrowers in trouble, he added. Nobody thinks the crisis is going to last forever; if people are willing to repay, OTP Bank is not going to give up a 20-year loan because of temporary problems, he said.
There would not have been any problem with the forint if it would have traded at 260-270 to the euro, but with low interest rates, Mr Csanyi said. “On the other hand, if an unrealistically strong forint weakens to 290, it looks like a huge fall, then come the analogies with Iceland.”
Mr Csanyi said the Central Bank Act ought to be changed as it is unacceptable that the national bank only follows an inflation target. The bank’s instruments, mainly the interest rate, is ill suited for this, he said.
Asked if he has political aspirations, Mr Csanyi said he did not, now or before, but in a position such as his “one follows closely the movement of parties”. He added that Prime Minister Ferenc Gyurcsany is far less interested in his opinion than Viktor Orban, head of the biggest opposition party Fidesz, who has asked his opinion several times recently.