Bank of Lithuania says OTP’s Russia business will face scrutiny in Luminor takeover review

Hungary’s OTP Bank, which has agreed to acquire Baltic banking group Luminor, continues to operate in Russia despite ongoing geopolitical tensions. The bank stated that it has been unable to find a legally, morally and economically acceptable way to exit the Russian market, where it currently serves approximately 2 million customers over four years since the start of Russia’s full-scale invasion of Ukraine. OTP announced Monday that it had signed an agreement to acquire Luminor, the Baltic region’s third-largest banking group, from a consortium of private equity funds managed by Blackstone and Norway’s DNB Bank. The transaction remains pending regulatory approvals and other customary closing conditions. The Budapest-based lender operates in 11 countries, including Russia through its subsidiary JSC OTP Bank. According to the bank, it has around 2 million active customers in Russia, holding a roughly 0.3% share of the banking market and operating at about 800 locations. In response to inquiries from LRT, OTP explained that it had examined options for leaving the Russian market following the outbreak of hostilities but found no viable solutions. “As with other Western banks, we have not been able to find a solution that is simultaneously legally, morally and economically acceptable,” the bank said in a statement. OTP emphasized that selling its Russian business under current conditions would result in receiving only about 5% of its market value, effectively transferring valuable assets to the Russian economy. To mitigate its exposure, OTP has taken steps such as halting new capital injections into its Russian subsidiary, ceasing group financing and repatriating a substantial portion of capital via dividend payments. The bank confirmed that it adheres to all applicable international sanctions and local legal requirements. Additionally, OTP highlighted its continued operations in Ukraine, where it claims to remain a key financial institution supporting the nation’s economic stability and humanitarian initiatives throughout the conflict. The bank’s presence in Russia has attracted attention, particularly due to its involvement in public events. Its Russian subsidiary has positioned itself as one of the country’s major employers and has participated in notable gatherings, including the St Petersburg International Economic Forum, which is supported by Russian President Vladimir Putin. Luminor reassured customers that the ownership change would not immediately affect their banking experience. “The transaction will be completed only after the required regulatory approvals are obtained and other closing conditions are met. Until then, Luminor and OTP will continue operating independently,” said Birutė Eimontaitė, a spokeswoman for Luminor Lithuania. She added that there would be no changes to customer banking services, contracts or daily interactions during the acquisition process. OTP Group serves more than 17.5 million customers across Central and Eastern Europe. The bank indicated that the acquisition would bolster its regional standing while enabling its entry into the Baltic market. Following the deal, eurozone operations are projected to represent about half of the group’s net loan portfolio, increasing from 42%. Total assets are expected to rise by approximately 13%, according to the company.