BBVA has reached a stake of 85.97% in its Turkish subsidiary Garanti after the closing of the takeover bid it had launched for the 50.15% of the capital it did not control. The bank, headed by Carlos Torres Vila as chairman, has paid 22,758 million Turkish liras (around 1.410 billion euros at the exchange rate) for the 36.12% it has acquired after the transaction.
The payment was made from its current equity and, according to BBVA, the capital consumption involved in this purchase was around 23 basis points, equivalent to just over 700 million euros.
The launch of the takeover bid was agreed by BBVA’s board of directors on 15 November 2021. Once the regulatory authorisations had been received, the acceptance period for the offer began on 4 April 2022. The initial price was 12.20 Turkish lira per share and BBVA had planned a maximum outlay of 2.250 billion euros, but the devaluation of the Turkish lira has reduced the amount. To compensate for the depreciation of the currency, the bank increased its offer to 15 Turkish lira per share on 25 April.
The takeover bid does not include two Garanti subsidiaries, Garanti Faktoring and Garanti Yatırım Ortaklığı, which are listed on the Istanbul Stock Exchange. These two subsidiaries each account for less than 1% of the Garanti group’s consolidated assets.
As the business daily 5 Días recalls, BBVA began its venture in Turkey in 2011, when it bought a 25.01% stake in Garanti from Dogus and General Electric. In 2015, BBVA became the largest shareholder, increasing its stake to 39.90% by purchasing an additional package of shares from Dogus. In 2017, BBVA hiked its stake to 49.85%.
Turkey is a key market for BBVA. In fact, at the bank’s recent shareholders’ meeting, both the chairman, Carlos Torres Vila, and the CEO, Onur Genç, defended their investment in the country. “Within this market, Garanti BBVA is the best bank in Turkey, with a proven capacity to generate results, even in difficult years, in complex environments such as those we have been experiencing for many years,” he said.
BBVA Research estimates annual growth of the Turkish economy at 3%. They also highlight its population pyramid, with more than 85 million inhabitants and an average age of 33; the country’s trade links with Europe and its low level of banking penetration, with a household debt ratio of less than 20% of GDP. They are all factors that contribute to “the long-term attractiveness of banking business in this region”.
With a market share amongst private banks of close to 20% in both Turkish lira loans and deposits, Garanti is the country’s strongest lender. At the end of March 2022, it had 21,680 employees, 5,606 ATMs and 1,003 branches.