Bancherul - BANCI / ENGLISH / Laszlo Diosi, OTP Bank: We maintain our plan to buy a bank in Romania to reach a market share of 5%

Laszlo Diosi is the CEO of OTP Bank Romania for five years, since 2007, and says he has plans to remain in Bucharest in the coming years, when it is possible to see the bank expansion on the local market by a taking over, according to plans announced by Hungarian group two years ago, the aim being to achieve a 5% market share of the banking market in Romania.

Laszlo Diosi is in Romania for 7 years, since 2005, the year he worked as Deputy Chief Executive Officer, Head of Retail Division, OTP Bank Romania (after the Hungarian bank OTP Bank took over RoBank in 2004) and later, starting 2007, as Chairman of the Management Board and CEO, OTP Bank Romania. He has a 12-year career in banking only, with key positions in banks like: OTP Bank (Project Leader, Mortgage Bank Project, Head of South Budapest Region Network Coordination, BPR project), K&H Asset Management Rt. and ABN-AMRO Fund Service Ltd. (Chairman of the Supervisory Board), K&H Bank, Hungary (Deputy Chief Executive Officer, Head of Retail Division), OTP Bank Romania (Chairman of the Management Board and CEO).

OTP Bank has a market share of above 1% today, without significant changes in recent years, the same position by the time of RoBank acquisition in 2004. In 2005, with the beginning of the process of launching new products and expanding retail branch network, the bank's official plan was to reach a market share of 4-5% in the medium term. The bank was interested in buying state owned savings bank CEC in 2006, but withdrew before improved financial submission and now the state bank is no longer for sale.

Hungarian bank also failed to achieve its 5% by organic growth, despite launching low interest rates loans denominated in exotic currencies, as Swiss francs, due to strong competition coming from Austrian banks or the Greek and French ones.

"Romania has opportunities but also great risks"

Regarding the situation of the bank he runs, Diosi says that it has done well during the crisis and is ready for the next period of growth, being optimistic about the potential development of the country.

Moreover, OTP Bank was among the first banks in Romania having stopped lending before the crises burst, especially for unsecured consumer loans, in order to clean its portfolio, but it was also among the first ones which resumed the landing by offering new products and which offered customer protection program to those with loan installment difficulties.

"I think it's very important to get back to lending because Romania is a really interesting market with lots of opportunities, higher than in other countries, but with incomparably greater risks if you do not understand them. Therefore, in order to succeed, you have to be here, to understand the risks, to assume the risks and manage them daily. If you do this, you will have great opportunities. You can prove it in the success stories of this country, where we see, on one hand, big bankruptcies and on the other great successes. Unless you take the risk in a fair way and manage it, you can have a resounding failure here. But also the opportunities are great. "

"We want to grow twice as the market"

Diosi considers that Romania will have a very long-term stable growth, with an advance GDP of 3-4 % per year, in a stable macroeconomic environment and inflation, increasing foreign trade, agricultural production, the share SMEs in the economy, with an important role in the energy sector in this part of Europe.

"We want to grow twice as the market. We can do this because we are self-financing, including this year we have attracted more deposits than loans, being active on the loan market. We want a market share of around 5% in the future, because it is more comfortable for reasons of economy of scale. We have a cost-income ratio of around 60%, which is not too bad, as we have a universal bank model, being present in each county. In some Western countries this ratio is much higher, reaching 70-80%, "says the head of OTP Bank.

A long success story instead of a shooting star

Laszlo Diosi says the bank has changed its strategy after the crisis, to be in line with the new direction of the economy, from consumption to production and agriculture. "After 2000, the country had a very good but overheated development period, with a lot of investments and new businesses, but in 2005-2006 the direction was lost, we turned from production and investments to consumption and luxury products. And people began to become complacent, instead of continuing to build up production and export capacities. Now we must turn to the right direction and begin a long success story that takes the place of a shooting star. That's why we are also changing our strategy in the bank: now we shift to consumer lending, to SMEs, to agriculture. It is in the interest of the country, in fact, and ours, to have banks that finance small business sector, "says Laszlo Diosi.

Communication: a lesson you can learn from wars

Diosi describes himself as a "hard worker" and in his spare time is a passionate about photography and military history. Communication, he says, is the prime ability of a manager, but unfortunately many business men do not grasp it.

"We encounter all the time and everywhere the same problem, of communication: a misunderstood communication can cause disasters both in war and in a company. The secret is that the message must reach unaltered the end user so that he can apply it practically. It is also about the implementation of a strategy and its adjustment to external realities. Because the success is determined by the details: of training, learning, motivation, human resources management. There is a saying that says: there is no big business, just a lot of small details, hard training, a lot of work, "says Laszlo Diosi.

Disastrous effects of the disruption of communication in a centralized organization can be seen in military history. "We have, for example, Soviet and Western doctrine. The Soviet Doctrin is centralised, without any freedom on the battlefield, while the Western one is based on highly trained soldiers that are free to act, that's why they succeeded in war. In Soviet doctrine, we saw what happened in the Iraq warwars: they cut communication lines so that the army remained paralyzed, since they had no right to act without orders from the central level. It's the same in a foreign bank: if you have to always ask permission from the parent bank for the approval of various decisions, you are lost locally. But we take local decisions, we have local management. If it is a management decision, I can take in 5 minutes, so we are very flexible, "says the CEO of OTP Bank.

The Hungarian Bank has been wearing a rather psychological war in last years in expansion plans in Romania, after the negotiations to takeover RBS Romania have failed. The bids are not lacking, but Hungarians would rather stay away of too risky, too expensive portfolios, and time seems to be on their side: as the crisis lasts, the prices of bank assets decreases.