ENBD up 6% as it agrees to buy Turkey bank for $2.8B
dubai — Dubai’s stock market rose on Wednesday, lifted by gains in top lender Emirates NBD after it agreed to buy Turkey’s Denizbank, while Saudi Arabian stocks climbed as banks rose across the board.
The Dubai index gained 1.1 per cent, with Emirates NBD rising 6.1 per cent in its highest trading volume in a year, with 8.8 million shares changing hands.
The bank will buy Denizbank for 15.48 billion lira ($2.8 billion) after reaching a new agreement with Russia’s state-owned Sberbank. The offer is a roughly 20 per cent discount to a previously agreed price, after a steep fall in the Turkish lira. —
dubai — Emirates NBD, Dubai’s biggest bank, will likely save as much as $400 million in a deal to buy Turkey’s Denizbank from Russia’s stateowned Sberbank in the wake of a drastic plunge in lira since the agreement was sealed 10 months ago.
Emirates NBD will pay Sberbank 15.48 billion lira ($2.8 billion), instead of the earlier agreed 14.6 billion lira as per the current lira valuation. In May 2018, Emirates NBD originally sealed the acquisition deal at $3.2 billion as per the then existing lira value.
The lira has tumbled over concerns about the central bank’s independence and Ankara’s worsening ties with Washington.
Dubai-based Arqaam Capital said the new deal represents a 16 per cent discount from the original acquisition price due to the lira’s depreciation. 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, Jaap Meijer, the head of research at Arqaam Capital Ltd said. Emirates NBD shares surged 6.1 per cent in its highest trading volume in a year, with 8.8 million shares chaning hands.
The landmark buyout, 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, Hesham Abdulla Al Qassim, vicechairman and managing director, Emirates NBD, said in May.
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. As of May 2018, total assets of Emirates NBD group stood at $129.5 billion.
Denizbank is Emirates NBD’s second major overseas acquisition. In 2013, Dubai’s largest lender bought BNP Paribas SA’s Egyptian unit for $500 million. 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.