CCA clears concentration between OTP Banka and Société Générale-Splitska Banka

The Croatian Competition Agency (CCA) cleared the concentration on the basis of which OTP Banka Hrvatska acquires a direct controlling interest over Société Générale-Splitska Banka, and indirectly over the undertakings SG Leasing, SB nekretnine, SB Zgrada and Société Générale Osiguranje.

OTP Banka and Splitska Banka are both universal banks operating in the entire territory of Croatia. The concentration will lead to a new entity, a bank with a market share higher than 10% and taking the fourth place of the biggest banks in Croatia. The concentration will create significant competitive constraints on the remaining three strongest market players – Zagrebačka, Privredna and Erste banks. In the late second quarter of 2018 Splitska Banka is planned to be merged with OTP Banka whereas full integration is planned by the end of 2019.

In accordance with the observations of the notifying party, given the fact that the banks adopt pricing strategies at the national level, due to the competitive constraint and the further decrease in the national reference rate (NRR) the concentration could lead to a decrease in the average interest rate in the market, which would result in lower interest rates for final consumers in Croatia.

A detailed analysis of all submitted data lead the CCA to the conclusion that the implementation of the concentration will produce effects in the relevant market involving the receiving of the money deposits and the approval of loans and other placements in the territory of Croatia and some counties.

Within the analysis of the relevant market and its particular parts the CCA established that regarding the citizens’ total money deposits and fixed-term deposits as well as the placed housing loans and all-purpose cash loans the market share of the new entity – OTP Banka will raise in Split-Dalmatia, Dubrovnik-Neretva and Zadar-County. In these counties the parties to the concentration traditionally and historically have had strong market positions particularly due to the well-known loyalty of the domicile clients to the local banks.

Yet, this will have no anticompetitive effects in these parts of the relevant market owning to significant competitive constraints and the size and power of the three biggest competitors that hold almost 60% of the assets and received deposits of all the banks in Croatia.

In addition, in all the listed counties there are sub-branches of other competing banks, which leaves the clients the freedom to choose. There are also no regulatory barriers to open new offices. What is more, internet banking and mobile banking represent a fast growing distribution channel compared with brick-and-mortar offices – the fact that contributes to strengthening of the competitive constraint on the leader in the market segments at issue in three counties.

Besides the acquisition of the direct controlling interest over Splitska Banka, OTP Banka also acquires indirect control over the undertakings SG Leasing, SB nekretnine, SB Zgrada and SG Osiguranje. However, it must be noted that the effects of the implementation of the concentration on the real-estate market, investment funds’ management market, life insurance market and the leasing market will remain insignificant.

The CCA has not received any replies to the published Request for Information and it cleared the concentration in the first phase.