MADRID, Nov 29 (Reuters) - The chief executive officer of
Spain's BBVA said on Monday that the weaker Turkish
lira has reduced the price of its deal to buy 50.15% of Turkish
lender Garanti by more than 400 million euros at
current exchange rates.
BBVA, which already owns part of Garanti, recently offered
to buy the remaining stake in the lender in a deal that at the
time was worth up to 2.25 billion euros ($2.54 billion).
On Monday, CEO Onur Genc said that the deal would now cost
around 1.8 billion euros and capital consumption would be around
1.1 billion euros, down from the 1.4 billion euros initially
estimated, as the deal had been structured in liras.
"The currency devaluation actually helps us, so we are going
to buy 50% of the bank if we can for 1.8 billion euros in cash
after 10 days (of a slide in the Turkish lira)," Genc said.
The deal, which is expected to close in the first quarter of
2022, was announced on November 19 and established a maximum
price of 25.697 billion Turkish lira ($2.03 billion) or 12.20
lira per share, should all Garanti BBVA shareholders sell their
"That entry price has improved, and has been improving every
single day," Genc said.
Capital consumption is lower than the price of the
acquisition as the bank already consolidates all of Garanti's
risk-weighted assets but not all of its equity.
Still, Genc said he was aware of the short-term risks and
macroeconomic uncertainty in Turkey.
On Monday, the Turkish lira slid as much as 4.6% against the
dollar, nearing record lows touched last week after President
Recep Tayyip Erdogan defended his low-rates policy despite
Though analysts mostly agree the deal makes senses from a
financial point of view, many highlight macroeconomic risks and
were expecting BBVA to increase its presence in Spain to
counter-balance its exposure to emerging markets.
Asked about resuming merger talks with Spanish lender
Sabadell, Genc said that Spain was obviously BBVA's
"home market" where the bank wanted to grow organically.
"There is nothing new to add," he said, regarding Sabadell,
but reiterated the bank, as in other jurisdictions, would
analyze opportunities if they added shareholder value.
($1 = 0.8861 euros)
($1 = 12.6679 liras)
(Reporting by Jesús Aguado and Emma Pinedo; Editing by Kirsten