MADRID/ISTANBUL – Spain’s BBVA said on Wednesday it had paid 22.76 billion Turkish lira ($1.43 billion) to increase its stake in Garanti to 85.97%, after its bid for the rest of the Turkish lender that didn’t own it.
Like its bigger Spanish rival Santander, BBVA is expanding in emerging economies to boost revenues, although some analysts point to risks from exposure to economic uncertainty in Turkey, where inflation spiked to a peak in April. two decades of almost 70%.
By crossing the 50% threshold in Garanti, with the acquisition of the further 36.12% stake, BBVA can allocate more capital to the Turkish lender without making an additional offer.
At the end of last month, BBVA had increased its offer for Garanti to 15.00 Turkish lira ($0.9404) per 12.20 lira share, or to 1.985 billion euros for the 50.15% stake in Garanti it did not already own. .
Despite increasing the offer by 23% to 31.595 billion lira in case of full acceptance, BBVA’s offer, valued in euros, was worth less than the 2.25 billion euros when it was initially announced on November 15, as the Turkish currency has since depreciated by more than 28%.
BBVA Chief Executive Onur Genc said last month that the bank could start applying “hyperinflation accounting” in Turkey as early as Q2. While Genc said the change could be positive for capital, he acknowledged it would lead to a drop in earnings.
On Wednesday, BBVA said in a filing with the Spanish stock market regulator that the acquisition of its 36.12% stake in Garanti had a negative impact of 23 basis points on the core Tier-1 fully loaded capital ratio, the strictest measure of solvency. (Reporting by Berna Suleymanoglu and Jesús Aguado in Madrid, editing by Andrei Khalip, Matthew Lewis and Leslie Adler)
This post Spanish BBVA raises stake in Turkish Garanti to 86%
was original published at “https://financialpost.com/pmn/business-pmn/spains-bbva-lifts-stake-in-turkish-garanti-to-86”