Bank of Latvia will express its concerns regarding planned transaction between Luminor Bank and OTP Bank - Kazaks

RIGA - The Bank of Latvia will express its concerns regarding the transaction in which Hungary's OTP Bank, which is actively operating in the Russian market, intends to acquire Estonia's Luminor Bank, but the final decision on whether to grant approval will have to be made by the Estonian banking regulator and the European Central Bank (ECB), said Martins Kazaks, President of the Bank of Latvia, in an interview with TV3 television on Friday.

He emphasized that at this point, the deal is still only a proposal. "At this point, it is still too early to speculate on any outcomes, as the process is still ongoing. Of course, the Bank of Latvia is providing and will continue to provide its opinion," said Kazaks.

The President of the Bank of Latvia noted that the main problem with this transaction is that OTP Bank provides services in Russia. "This will undoubtedly be one of the factors that will be evaluated," said Kazaks.

He also expressed the view that the financial sector needs a "shake-up" to increase activity, and that the entry of a new bank could achieve this, but at the same time, one of the main risks in this case is that OTP Bank has been very active in Russia in recent years.

"We will unequivocally express our opinion, voice our concerns, and certainly also point out how these concerns could be alleviated, but the decision will rest with the Estonian regulator and the ECB," said Kazaks, adding that if the relevant authorities approve the transaction, the Bank of Latvia will not be able to object to it.

As reported, on July 20 of this year, Luminor Bank announced that it would be acquired by OTP Bank. The announcement stated that regarding the acquisition of Luminor Bank, OTP Bank has signed an agreement with a consortium of private equity funds managed by the U.S. investment firm Blackstone and DNB Bank.

The Bank of Latvia informed LETA that the transaction will be reviewed by the Estonian Financial Market Authority, as Luminor Bank is registered in that country, and has branches in Latvia and Lithuania, as well as the ECB’s Supervisory Board, since Luminor Bank is one of the large systemic banks supervised at the ECB level.

A statement from Luminor Bank noted that, as a result of this transaction, OTP Bank plans to expand its presence to 14 countries and increase its total assets by more than 10 percent, while the share of its operations in the eurozone will reach 50 percent.

OTP Bank is committed to continuing to support Luminor Bank’s growth, building on the bank’s existing strengths, market position, and customer relationships. OTP Group plans to strengthen its long-term presence in the Baltic region and, through Luminor Bank, promote the financial well-being of its customers, according to a statement.

LETA’s archives show that Hungary’s OTP Bank had already expressed its intention to acquire Luminor Bank several years ago. At that time, it was reported that the bank operates not only in Hungary but also in Albania, Bulgaria, Croatia, Russia, Montenegro, Moldova, Serbia, Slovenia, Ukraine, and Uzbekistan.

OTP Bank’s 2025 financial report shows that the bank’s profit was 663.253 billion Hungarian forints (EUR 1.832 billion), which is 11 percent less than the previous year. Meanwhile, the bank’s total assets at the end of 2025 amounted to 19.001 trillion forints (EUR 52.482 billion).

Last October, the international credit rating agency Moody’s affirmed OTP Bank’s long-term deposit rating at Baa1, changing the outlook from positive to stable. The bank’s baseline credit assessment (BCA) was raised from Baa1 to Baa3. Meanwhile, in April 2025, the credit rating agency S&P Global Ratings raised OTP Bank’s long-term and short-term issuer credit ratings from BBB-/A-3 to BBB/A-2, while changing the rating outlook from stable to negative.

Luminor Bank’s website states that it is the third-largest financial services provider in the Baltic region, serving individuals, families, and businesses. In 2025, the bank posted a profit of EUR 158 million and achieved a return on equity of 8.6 percent. At the end of 2025, the bank’s Common Equity Tier 1 (CET1) ratio was 20.2 percent, while its total capital adequacy ratio was 24.6 percent.

A branch of Luminor Bank operates in Latvia. In terms of total assets, the Luminor Bank branch in Latvia is the fourth-largest bank in the country. The bank is controlled by the U.S. investment firm Blackstone.