Spain’s BBVA raised its stake in Turkish Guarantee to 86%

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MADRID / ISTANBUL – Spain’s BBVA said on Wednesday it had paid 22.76 billion Turkish lira ($ 1.43 billion) to increase its stake in the guarantee to 85.97%, following a bid for the rest of the Turkish lenders who did not own it.

Like its major Spanish rival Santander, the BBVA is expanding into emerging economies to boost revenue, although some analysts point to risk from the manifestation of Turkey’s economic uncertainty, where inflation reached a two-decade high of close to 70% in April.

Acquiring a further 36.12% stake, exceeding the 50% threshold in the guarantee, would allow the BBVA to allocate more capital to the Turkish lender without launching an additional tender offer.

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Towards the end of last month, BBVA raised its bid for Garanti from 12.20 Lira to 15.00 Turkish Lira (9 0.9404) per share or 1.985 billion Euros for a 50.15% stake in Garanti which it has not already held.

Although the offer increased by 23% to 31.595 billion lira in terms of total acceptability, when valued in euros, BBVA’s bid was worth less than 2.25 billion euros when it was initially announced on 15 November because the Turkish currency had depreciated by more than 28%. .

BBVA chief executive Onur Jensi said last month that the bank could start implementing hyperinflation accounting in Turkey “early in the second quarter”. Although Genc said the change could be positive for capital, he acknowledged that it would have an impact on earnings.

On Wednesday, BBVA said in a filing with the Spanish Stock Market Supervisor that the acquisition of a 36.12% stake in Guarantee had a negative effect of 23 basis points on its core Level-1 fully loaded capital ratio, a strict measure of transparency. (Reporting by Barna Sulemanoglu and Jesus Aguado in Madrid, edited by Andrei Khalip, Matthew Lewis and Leslie Adler)

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