Belgian banking group KBC has brokered a deal to purchase OTP Banka Slovensko, the Slovakian arm of Hungarian banking group OTP Bank.

OTP Banka Slovensko is a mid-sized bank focusing on retail, micro SME and SME customers.

Under the terms of the deal, KBC will own 99.44% of the shares in OTP Banka Slovensko.

Upon completion of the transaction, KBC Bank will become the new parent company of the Slovakian lender.

KBC Group said that it will now merge the operations of its subsidiary ČSOB Bank and OTP Banka Slovensko.

The merger, according to the Belgian banking group, will bolster ČSOB’s bank-insurance franchise in Slovakia.

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Currently, ČSOB Bank occupies the fourth position in the Slovakian banking market in terms of assets. It boasts of a market share of nearly 12.6%.

Until the merger is completed, OTB will continue to operate under its current brand name.

KBC Group CEO Johan Thijs said: “Acquiring OTP Banka Slovensko will allow us to substantially strengthen our share of the Slovakian market while enabling us to benefit from economies of scale and increased visibility in this highly competitive market.

“It will also create opportunities for us to provide high level, complex financial services to a wider range of customers, who will undoubtedly benefit from this merger.”

OTP Bank chairman and CEO Sándor Csányi commented: “This deal will enable our group to focus on markets where we can achieve a higher market share in the future.

“I am fully convinced that the change in ownership will offer numerous opportunities for customers and colleagues both now and in the future.

Subject to the receipt of regulatory approvals, the transaction is expected to be completed by the second or third quarter of this year.

In June 2017, KBC Bank completed the takeover of United Bulgarian Bank (UBB) and Interlease from the National Bank of Greece in a cash transaction valued at €610m.

In May last year, OTP Bank signed an agreement to acquire Societe Generale’s Slovenia business for an undisclosed sum.

Under the agreement, OTP Bank acquired SKB Banka (Slovenia) and its subsidiaries SKB Leasing and SKB Leasing Select.