Updated 2.55pm
Hungarian bank OTP, once dubbed an “international war sponsor” in the wake of Russia’s invasion of Ukraine, is one of the bidders vying to take over HSBC Malta.
HSBC Malta said yesterday that its prospective sale is now formally underway, with the bank in the process of furnishing several bidders with the necessary confidential information.
It insisted that “there is no preferred offeror and that the process remains at an early stage”. However, sources told Times of Malta that OTP has emerged as one of the frontrunners, raising concerns amongst insiders over the bank’s controversial recent history.
OTP is Hungary’s largest bank, with a wide presence across Eastern Europe. It is believed to have over 17 million customers across the 11 countries in which it operates but this would represent the bank’s first venture outside of the Eastern bloc.
Founded in 1949 by the Hungarian state, OTP gradually transformed itself into a successful commercial bank. Its largest shareholder, holding just over 8.5% of the shares, is Hungarian oil and gas MOL Group.
The bank reported a profit of just over €2.7 billion after tax in 2024.
But, despite its commercial success, OTP has faced controversy over the years, particularly over its continued presence in Russia in the aftermath of the country’s invasion of Ukraine in February 2022. The bank is believed to have as many as three million customers across Russia today, recording a post-tax profit of almost €350m in Russia alone last year. It is also active in Ukraine, where it reported a profit of €104m last year.
In May 2023, Ukraine’s National Anti-Corruption Agency (NACP) placed OTP on its list of international sponsors of war, a list created by the Ukrainian authorities to highlight businesses operating and paying taxes in Russia after the invasion, arguing that doing so effectively funded Russia’s war effort.
NACP also argued that the bank was offering Russian soldiers preferential loan terms and that it had purchased Russian bonds. OTP strongly refuted these claims, saying that its presence on the list was “undeserved” and insisting that it did not provide the Russian military with preferential treatment.
The news caused a diplomatic stir, after the Viktor Orbán-led Hungarian government took exception to OTP’s inclusion on the list, threatening to veto crucial EU military aid towards Ukraine in retaliation.
“Until OTP Bank is removed from this list, Hungary will not participate in further EU funding for arms shipments to Ukraine,” Hungarian foreign ministry spokesman Mate Paczolay is reported to have said.
NACP eventually agreed to temporarily lift OTP’s designation, following a prolonged tug-of-war between Hungarian, Ukrainian and EU authorities, with the bank reportedly committing to review its future plans for the Russian market.
More broadly, OTP is believed to be a key player in Hungary, with close economic and political ties to Orbán’s governing Fidesz party. OTP chair Sándor Csányi, one of the country’s most influential businessmen, is widely seen as a shrewd operator, building close ties with Fidesz over the years, just as he had with Hungary’s previous socialist government.
Csányi is also the president of the Hungarian Football Federation and a vice-president of both FIFA and UEFA.
HSBC ‘committed to respecting confidentiality’
It remains unclear whether Maltese or EU authorities would welcome OTP’s bid, given the bank’s ongoing and controversial presence in Russia. With HSBC being one of Malta’s three systemic banks, its sale will need to be rubber stamped by both the Malta Financial Services Authority and the European Central Bank.
When asked to confirm OTP’s bid, an HSBC spokesperson declined to comment. “We are committed to respecting the confidentiality of this process. It is not appropriate to comment on prospective offerors at the current time. The bank will continue to provide information to the market in line with its obligations under the Capital Markets Rules of the MFSA.”
Asked about their bid, OTP Bank said: "For prudential and business reasons we do not disclose information to the media about our acquisition or expansion plans."