BBVA pays $1.42 billion to raise stake in Turkey's Garanti to 86 percent

Spanish bank BBVA paid 22.8 billion liras ($1.42 billion) to increase its stake in Turkish bank Garanti to 86 percent, it told the Istanbul Stock Exchange on Wednesday.

BBVA is one of the few large foreign companies growing their presence in Turkey following two currency crises in 2018 and late last year. Several foreign banks such as HSBC and UniCredit have either exited the country to consolidate their emerging market investments or are looking for buyers.

The Spanish bank will now be able to increase Garanti’s capital without first resorting to a tender offer. BBVA is raising its stake in Garanti despite skyrocketing inflation in the country -- consumer price rose by an annual 70 percent last month.

BBVA had raised an offer for the remaining shares in Garanti to 15 liras per share late last month from the previous offer of 12.2 liras it made in November. That was equivalent to 1.99 billion euros for the 50.2 percent stake in Garanti that it did not already own. When valued in euros, the offer was lower than the previous one of 2.25 billion euros because of the lira’s depreciation.

BBVA could start applying hyperinflation accounting in Turkey as early as the second quarter, CEO Unur Genç said last month. He said that the change could be positive for capital but hit the company’s earnings.

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