Actuality, November, 13, 2007

OTP has given for the Rostov bank more than three its capitals.
Hungarian OTP Bank reported about acquisition

of the Don People’s Bank (DPB) in Rostov Oblast for $40,9 mln. At the same time the ratio of the transaction amount to the own capital

turned out to be higher than of the “St.Petersburg” Bank that had been quartered recently.

Experts consider that the foreign investors’ interest to small banks is determined not only by availability of regional business but also by small banks' independence from the external capital sources.

Laslo Volf, the deputy chairman of the board of directors OTP Bank Plc., and Leonid Shafirov, chairman of the board of directors of the DPB, signed documents about the Russian bank sale. Hungarians paid $40,9 mln. for 100% of stocks (about one billion of rubles). “We want to increase our attendance in crediting segment in Russia”, so explained Laslo Volf the necessity of acquisition.

“And the DPB, specializing in consumer crediting and crediting of small and mid business, is perfectly blended with our strategy”. According to him, the DPB will be integrated into Investsberbank, that has been already acquired by the OTP group.

The Don Peoples’s was registered in 1992 under the name of the Stanitsa Commercial Bank ”Yeg?rlyk”. In 1998 this bank was renamed. The bank assets totaled RUR 2,9 bln by October, 1, 2007 (that’s the 330th place among the banks of Russia), own capital was RUR 341 mln. (that’s the 439th place among the banks of Russia). Now the bank serves about 170 000 of population accounts and more than 50 000

of credit agreements through 46 branches.

Shareholders managed to sell the DPB with a coefficient of 3,3

to the own capital. It is more than the coefficient of the “St.Petersburg” bank (2,9), has recently conducted IPO.

Meanwhile regional banks before the development of mortgage crisis in external markets were rarely sold with a coefficient more than 2-2,5. So, in July Svaz-bank acquired 100% of Gelendzhik-Bank for $5,6 mln. (with a coefficient about 1,5). “Taking into account the size of the DPB, a quite good coefficient would be 2,5-3, so that this bank would cost at least 20% cheaper”, considers Olga Belenkaya, the deputy manager of “Sovlink” company analytical department.

Experts consider that a high price is explained by high potential of regions in the development of bank business and by independent capital sources.

“Frequently, the funding structure of small regional banks does not depend on the international capital markets”, explained Denis Mukhin, the analyst of ”Brokercreditservice”. “If to take into account the amount of the DPB branch banks, it turns out that

it was paid almost one million dollars for a branch bank.

It would be cheaper to open the additional offices of Investsberbank (according to the estimations of specialists opening of a bank office costs approximately $300-500 thousands). But the client base of the DPB and easiness of integration cover all the costs”, explains its high price Olga Veselova, the analyst of “Troika Dialog”.

Nevertheless, OTP is not going to reduce investments. “We consider other candidates for absorption in Russia,” declared Mr. Laslo. “The priority regions for us are Ekaterinburg, Sverdlovsk Oblast, Nizhny Novgorod and Povolzhje, and also few large cities in Siberia”.