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the second quarter. The sale of Denizbank marks the largest M&A deal in Turkey since 2012. The bank was acquired in October 2006 by Dexia, a leading financial group in Europe. Having operated under the Dexia umbrella for six years, DenizBank was sold to state-owned Sberbank, Russia’s largest bank, in September 2012. “When the deal was first announced [in May last year] the price to book value for the Turkish banking industry was around 0.7 and it should be around 0.5 today. US and European sanctions on Russia caused problems for the foreign operations of Russian banks. Apparently Sberbank was also affected by those sanctions, otherwise, I believe, it would not opt to divest its stakes in Denizbank,” Ates said. Ates also noted that the new owners may inject capital into Denizbank. “At the end of the day, the shareholders will decide about it. Denizbank has been a very successful, profitable bank. If the new owners think [injecting] more resources will create a higher return, they would do that.
Emirates NBD obtains 20% ‘lira crisis’ discount on Sberbank’s Turkish unit Denizbank. The Turkish lira crisis has helped to secure Dubai’s biggest bank, Emirates NBD, a discount of around 20% on the acquisition price it must pay Russia’s state-owned Sberbank for its Turkey unit Denizbank. Jaap Meijer, head of research at Arqaam Capital, told Bloomberg the Dubai lender might actually save around $700mn because the initial price given was $3.45bn if accrued interest, as required under the first agreement, was added to the transaction. The revised price is at 0.9 times book value, slightly lower than the 1.05 to 1.06 times book value in the original deal, Meijer was reported as saying. Emirates NBD shares surged on news of the changed deal. Sberbank, Russia’s biggest bank by assets, said it expected to receive $5bn from the sale of Denizbank, including capital and debt. The bank added that it expected the deal to be closed by the end of the second quarter.
Sberbank shifting back home. Sberbank’s present strategy involves shifting back to its home market. It bought Denizbank seven years ago for around $3.5bn when it wanted to establish a presence abroad. Denizbank’s equity amounted to TRY15.51bn as of December 31, Emirates NBD said in a stock market filing. The deal is subject to regulatory approval. The transaction is both Turkey’s largest M&A deal since 2012. It is also the biggest acquisition of the Dubai bank, the second biggest lender in United Arab Emirates (UAE). Emirates NBD had $136bn in assets at the end of December, while Denizbank had $37bn, according to data compiled by Bloomberg. Denizbank was Turkey’s ninth-largest bank by assets as of the end of September, according to banking association data.
Lenders in Turkey are currently facing government ‘advice’ that they should lower interest rates and reverse a decline in credit to help pull the Turkish economy out of its first recession in a decade . Turkish financial institutions, meanwhile, are contending with an expanding mass of bad debt and restructuring demands from companies struggling to repay FX loans. However, Gulf-based banks like Turkey’s young and under-banked population of around 81mn. Qatar National Bank bought National Bank of Greece’s Turkish unit in 2016, paying slightly less than book value. Commercial Bank of Qatar took full ownership of Alternatifbank the same year.
Turkey’s TEB Asset Management purchasing all shares of ING Asset Management. Turkey’s TEB Asset Management said on April 26 it is purchasing all of the shares of ING Asset Management, a subsidiary of ING Bank. The two companies’ combined asset size, which amounted to Turkish lira (TRY) 9bn ($1.52bn) in the first quarter of 2019, was expected to increase after the purchase, TEB Asset Management’s CEO Selim Yazici said.
Recession-mired Turkey undermines Q1 net profit of Spain’s BBVA bank.
Spanish bank BBVA reported a 9.8% decline in first-quarter profit on April 29 as the still depreciating Turkish lira (TRY) impacted on earnings at its Turkish unit. The lender, Spain’s second largest, posted net profit of €1.16bn ($1.3bn)
79 TURKEY Country Report May 2019 www.intellinews.com