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BBVA rolls out offers for the rest of Garanti in bets on Turkey

BBVA has launched a €2.25 billion bid that will give it full ownership of Turkish lender Garanti, as the Spanish bank makes a long-term bet on an economy that has sunk for years. recently.

The Spanish lender said Monday that it has offered to buy the 50.15% it does not yet own at Garanti, Turkey’s largest bank by market capitalization. The 25.7 billion TLS price represents a 34% premium to the average price of Garanti stock over the past six months.

The move is the most recent example of BBVA deploying some of the $11.6 billion it raised from selling US assets to PNC this year.

BBVA CEO Onur Genc, ​​who hails from Garanti, said: “The sale of our US subsidiary provides us with the strategic option to, among other things, invest the excess capital. into our main markets.

The bank also said it was carrying out a 3.5 billion euro share buyback, one of the largest in Europe.

The purchase of Garanti comes amid a slide in the value of the Turkish lira, whose purchasing power in euros has fallen to about a quarter of what it was in November 2014, when BBVA agreed to pay 2 billion euros for the purchase. 14.89 shares of Garanti, a transaction completed in 2015.

“The price is very attractive to the minority shareholders of Garanti BBVA,” said Carlos Torres, executive chairman of BBVA. “Turkey is a strategic market for us and despite the short-term fluctuations it experiences. . . has great potential. ”

Garanti, with more than 21,000 employees and 1,000 branches, says it is the most profitable bank in the country, with a return on equity of 19.3% and a bad debt ratio of 4%.

BBVA has taken control of Garanti’s board since the 2015 transaction. It later agreed to increase its stake to 49.85% in 2017.

Acquiring the rest of Garanti, which BBVA expects to complete in the first quarter of next year, will boost the Spanish lender’s profits by fully consolidating Garanti’s holdings.

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