Thursday, February 28, 2008

OTP Bank Romania to slow expansion

28 Feb 2008

OTP Bank Romania will open just five new branches this year, compared to 28 alone in Q4 2007, because of a shortage of qualified staff and high property prices.
CEO László Diósi told MTI on Wednesday that the review of earlier expansion plans and a temporary suspension of granting personal loans at 14 branches of the local division of Hungary’s leading lender do not affect meeting OTP Bank Romania 's (OBR) volume targets, Diósi said adding that OBR plans to break into the black this year.

He said that the bank stopped signing contracts for uncollateralized personal loans at 14 of branches in November, though it will gradually reintroduce the loans from March. He attributed part of the reason for the high rate of problem loans at the bank to under-qualified staff.

Diósi said more than a thousand bank branches opened in Romania in the past three years, creating a shortage of qualified labor. Wages rose 25%, well above the 7% inflation rate.

OBR had 109 branches at the end of 2008, still far from the 170-200 branches that would give it optimal coverage, Diósi said. The unit will, however, focus rather on the better utilization of the existing network and on sales through agents, he said.

OBR will focus on mortgage loans and products new to the Romanian market that have already been tried and tested in Hungary.

OBR racked up losses of Ft 3.5 billion in 2007, still an 18.3% improvement over losses in 2006, OTP Bank said in its preliminary report. (MTI-Econews)

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