Emirates NBD bets $3.2b on Turkey's wild ride

Emirates NBD has sealed a $3.2 billion deal to acquire Denizbank, the Turkish subsidiary of Sberbank, Russia's largest lender.
The landmark buy-out, the largest ever by the Dubai-based lender, is in line with the bank's goal to emerge as a leading bank in the Middle East, North Africa and Turkey region, said Hesham Abdulla Al Qassim, vice-chairman and managing director, Emirates NBD.
Denizbank is the fifth-largest private bank in Turkey and the biggest asset held by Sberbank outside Russia. The Turkish lender has assets of $37.25 billion and operates 751 branches, including 43 outside Turkey, while Emirates NBD has operations in the UAE, Egypt, Saudi Arabia, India, Singapore, the UK, and offices in China and Indonesia.
The acquisition of 99.9 per cent of Denizbank is the biggest for Emirates NBD, and will add about $37 billion to its assets. At present, total assets of Emirates NBD group were $129.5 billion. The bank currently has 228 branches and 1057 ATMs in the UAE.
Denizbank is Emirates NBD's second major overseas acquisition. In 2013, it bought BNP Paribas SA's Egyptian unit for $500 million.
Following the announcement of the deal, Emirates NBD shares surged as much as 8.4 per cent, the most in more than two months, to Dh10.70. The shares have advanced 29 per cent this year compared with a 12 per cent decline for the benchmark index.
Shayne Nelson, Group CEO, Emirates NBD, said the transaction represented a significant milestone for Emirates NBD and is expected to be accretive to shareholders in the first year.
"Denizbank is a well-managed and prominent organisation in the Turkish banking market, which with the current deal structure, comes at a reasonable price on acquisition for Emirates NBD," he said.
"Denizbank is one of the most attractive assets in the Turkish banking sector. The decision to sell Denizbank is prompted by a change in Sberbank Group's international strategy and will allow us to focus further on development of ecosystem of Sberbank," said Herman Gref, CEO of Sberbank.
In a statement, the Dubai-based bank said it would increase its international presence to 13 markets and international assets will exceed 30 per cent of the consolidated post acquisition balance sheet.
The acquisition is expected to close in 2018, and is subject to regulatory approval in Turkey, Russia, the UAE and other relevant jurisdictions where Denizbank operates.
For Sberbank, the sale of its Turkish unit, which it bought in 2012 for 6.9 billion lira, is part of a strategy to divest overseas businesses to focus on its domestic market. The sale marks a further retreat of the lender's international ambitions after it was hit with US and European Union sanctions in 2014, in response to Russia's role in the Ukraine crisis.
Besides its Turkish business, Sberbank has a network of eight subsidiary banks in central and eastern Europe. It has signalled it is interested in finding a buyer for some of those assets if it can get the right deal.
 
 
- issacjohn@khaleejtimes.com
 
 
Emirates NBD, will increase its international presence to 13 markets and international assets will exceed 30 per cent of the consolidated post acquisition balance sheet.