According to Reuters, Sandor Csanyi, the CEO of OTP Bank, stated that he has doubts whether CEC bank will be sold at all and that ‘there is a very large discrepancy between the real and the estimated value of the bank’.
Our view: The CEO reiterated that OTP would no overpay for the Romanian CEC, suggesting that the final price is even higher than previously rumoured at between EUR 500m and EUR 700m, suggesting a price of 4.5x - 6.3x. Given the level of restructuring required and the bank's limited profitability, we would expect a price towards the low end of this range as well as the market accepting any price higher than that. The news came out yesterday and had a positive trading impact on the stock, as the possibility of a new share issue to fund the potential acquisition of CEC has been weighing on the stock price of OTP Bank. We reiterate our Buy rating on the stock.