Sberbank close to buying Dexia’s DenizBank in Turkey

May 25, 2012, Friday/ 16:07:00

Bailed out Franco-Belgian lender Dexia has begun exclusive talks with Russian lender Sberbank to sell its Turkish unit DenizBank, and wants to reach an agreement as soon as possible.

Sberbank, Europe's No.2 lender by market value, is seeking a foothold in its long-eyed Turkish market and was competing for DenizBank with Qatar National Bank.

Sberbank now appears to be the only bidder and is in exclusive talks, Dexia said in a statement to the Public Disclosure Forum (KAP) of the İstanbul Stock Exchange (İMKB) where a small minority of its shares (less than 1 percent) are traded on Thursday, adding that Sberbank had submitted a binding offer. "The official bid is planned to be made by the end of May," one banker said earlier.

Sources said previously that the Belgian government, a Dexia shareholder and responsible for most of its guarantees, had wanted 1.5 times DenizBank's book value, which according to Reuters calculations is around $3.6 billion.

French Les Echos newspaper reported on Thursday that the price should be close to the 3 billion euros ($3.77 billion) expected by the Franco-Belgian bank. It said talks should take several weeks and be completed in the summer.

Crippled by the euzozone debt crisis, Dexia was bailed out last October by France, Belgium and Luxembourg, and its assets are being sold. It is set to be left as a portfolio of bonds and loans in run-off.

If the deal proceeds, DenizBank will be the second step in Sberbank's international foray, after it paid 505 million euros ($635.5 million) in February to buy VBI from Austrian lender Volksbanken AG, aiming to boost its presence in emerging Europe.

Sberbank is ramping its activities in central and eastern Europe and Turkey to diversify away from a home market where it controls a third of overall lending and half of household deposits. It aims to earn at least 5 percent of income from international operations by 2014.

DenizBank, Turkey's sixth largest private sector bank, has 588 branches across Turkey, a further branch in Bahrain, a Vienna-based subsidiary Denizbank AG and a Moscow-based unit for clients doing business in Russia.

It had total assets of 44.8 billion Turkish liras ($24.2 billion) at the end of 2011. Before its break-up, Dexia had planned that DenizBank would make up 25 percent of its income in 2014. Dexia has a 99.84 percent stake in DenizBank, with a small number of shares floated on the İMKB.

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