Spain’s BBVA ups stake in Turkish bank Garanti for $1.4 bn

Spanish lender BBVA has acquired an additional 36.12% stake in Turkish bank Garanti for 22.76 billion Turkish lira, or about $1.43 billion.

The acquisition follows BBVA’s takeover offer for Garanti’s shares it didn’t already own. With the additional stake, BBVA now owns 85.97% of the Turkish bank, according to a filing with the country’s stock markets regulator.

The fact that the Spanish bank has crossed the 50% threshold ownership mark into the Turkish bank means that it can now pump more capital into the latter without the need to go in for a tender offer.

Before the additional stake purchase, BBVA held a 49.85% stake in Garanti. It had raised its bid to 15 Turkish lira per share from an earlier offer of 12.20 Turkish lira. This effectively meant it was ready to pay €1.98 billion, or $2.1 billion, for the 50.15% shares it did not yet own. The initial bid had been announced in November 2021.

Interestingly, although this represented an increase of 23% over the November 2021 offer, the subsequent depreciation in the Turkish currency vis-à-vis the US dollar meant that the final bid was lower than the original offer. The lira slipped 44% against the dollar last year and has weakened 15% more so far this year.

The latest acquisition comes even as the Turkish economy has been struggling and its lenders have been under pressure. Data earlier this month showed inflation in Turkey surged to a staggering 70%.

Like BBVA, its larger Spanish rival Santander has also been expanding its footprint into emerging markets in a bid to add more heft to its revenue.