Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) is looking to pep up its weak growth prospects at home with a move into the fast-growing Turkish banking market.
Earlier this month, it agreed to buy a 24.9% stake in Garanti Bank, Turkey’s number two bank, for €4.2 billion and then announced it would launch a €5 billion rights issue to pay for the deal. BBVA is acquiring an 18.6% stake from cash-strapped General Electric, which will retain a minority shareholding in Garanti, and 6.3% from Turkey’s Dogus Group.
The latter move means that Garanti and Dogus, which was Garanti’s biggest shareholder, now have identical stakes in the bank. They will jointly manage Garanti. Both BBVA and Dogus will appoint four directors to the board. After five years, however, BBVA will be able to appoint two-thirds of the board thus getting around the thorny issue of control for the Spanish bank.
Best potential
"BBVA wants to be in markets with the best potential for growth and Turkey, through a leader bank like Garanti, is undoubtedly one of those," says Francisco Gonzalez, BBVA’s chairman.
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| Francisco Gonzalez, BBVA’s chairman: buying a stake in Garanti |
Around 49% of Garanti’s equity is listed on the Istanbul Stock Exchange (ISE), where it is the biggest bank by market value and one of the most popular investments with foreign investors.