Hungary's Largest Bank OTP May Fully Exit Russia Due to EU Regulators' Pressure

Hungary's largest bank, OTP Bank, is considering options for a complete exit from the Russian market amid increased scrutiny from European regulators regarding its planned acquisition of the Baltic Luminor Bank. At the same time, documents revealed that among the bank's clients in Russia were companies linked to the gas giant Gazprom and entities associated with Russian foreign intelligence.

This was reported by Dilo, citing an investigation by Bloomberg.

Following the publication of the material, the bank's shares on the Budapest Stock Exchange fell by 3.8%, marking the steepest daily decline since March.

Why the Bank is Talking About an Exit Now

OTP Bank remained one of the few European banks that continued operations in Russia after the full-scale invasion of Ukraine in 2022. Now, the Hungarian group is attempting to finalize its largest deal in history—the acquisition of the Baltic Luminor Bank, which has assets exceeding 15 billion euros (approximately 17.3 billion dollars), which would significantly expand its presence in the Eurozone.

However, the European Central Bank and Estonia's financial supervision have begun to scrutinize the purchase closely. The central banks of Latvia and Lithuania had previously expressed concerns about OTP's business in Russia, and Estonia's Finance Minister, Jürgen Ligi, called the bank's position a "moral disgrace." The Estonian regulator confirmed that operations in Russia raise significant doubts and are the main point of the entire review.

OTP Group's CEO, Péter Chányi, acknowledged that due to interest in the Baltics and difficulties in withdrawing money from Russia, the bank has begun to reassess its strategy and may completely cease operations in Russia by the end of the year.

The situation in Hungary has also changed. After Viktor Orbán lost power in April, the new government of Prime Minister Péter Mándy began to sever close ties with Moscow: 10 Russians suspected of espionage were expelled from the country, and the government announced a refusal to purchase Russian gas.

What Documents Revealed About Russian Business

Journalists gained access to letters, contracts, and bank receipts revealing the bank's clients' operations over the past four years:

• Proposals for "Gazprom": In spring 2026, the companies discussed a payment scheme between "Gazprom Export," the Serbian distributor Yugorosgaz (75% owned by Gazprom), and the affiliated firm Rosingaz. Money in euros was planned to be transferred from the Yugorosgaz account in Serbian OTP to accounts in the Serbian state bank BPS. In September 2022, Yugorosgaz sent "Gazprom" over 4.3 million euros in dividends involving OTP Bank Serbia, the main bank in Budapest and Gazprombank;
• Money for Malofeev's Fund: In September 2022, the organization "Tsargrad Society" of Russian businessman Konstantin Malofeev was to receive a grant of 397 thousand dollars (33.5 million rubles) from Sberbank to an OTP Bank account in Moscow. The organization confirmed that they paid for the education of students from the occupied territories of Ukraine ("Novorossiya"). The oligarch himself has been under U.S. and EU sanctions since 2014 for financing the annexation of Crimea;
• Services for Russian State Structures: The bank's clients received payments for various services for Russian government agencies. For example, the firm "RPS Service" received 735 dollars (62 thousand rubles) from the "History of the Fatherland" fund, whose council is chaired by the head of the Russian Foreign Intelligence Service, Sergey Naryshkin. The wholesale company "Phoenix" expected a payment of 659 dollars (55.6 thousand rubles) from the enterprise "Yasen," which manages property of the same intelligence service. The company "Training Center No. 3 1C" signed a contract for 435 dollars (36.7 thousand rubles) with the state company "Russia," whose planes transport Vladimir Putin.

All these documents do not indicate direct violations of sanctions by the bank itself or that Russian state structures had their own accounts there. OTP stated that they comply with banking secrecy, and an internal audit found no violations of U.S., EU, UN, or UK sanctions.

Income During War and Difficulties of Exit

OTP's market share in Russia is small—only 0.4% by assets. This is much less than in UniCredit or Raiffeisen. However, over the years of the war, the business there has become significantly more profitable, as profits increased more than fivefold—approximately to 635 million dollars (202 billion forints) last year, and the volume of deposits soared sevenfold. More than 80% of deposits came from remaining international companies in Russia, which trust the European bank more. Since the beginning of the full-scale war, the bank has withdrawn about 880 million dollars in dividends from Russia.

At the same time, the bank noted that after February 2022, they completely stopped lending to Russian enterprises, reduced staff by a quarter, and closed 40% of branches, leaving only consumer loans to the population.

OTP also noted that in Ukraine, their business is considered strategically important for the state, and the credit portfolio of the Ukrainian division grew by 35% just last year.

Selling the business in Russia quickly is very difficult. Buyers must be approved simultaneously by European regulators and the Kremlin. Moreover, Russian authorities allow foreigners to take only about 5% of the market price of companies. Because of this, OTP previously stated that sales are currently practically impossible.

It was previously reported that shares of the Austrian banking group Raiffeisen Bank International (RBI) plummeted by more than 8% during trading after the publication of an investigation by the investment fund Grizzly Research. Analysts accused the bank's Russian division of systematically participating in operations to circumvent Western sanctions amounting to 1.2 billion dollars in favor of the Russian military-industrial complex.

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