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Abu Dhabi, UAEMonday 18 June 2018

Emirates NBD shares soar on talks to acquire Turkish DenizBank

Dubai's biggest bank by assets confirmed preliminary discussions on the matter 

Emirates NBD has confirmed it is one of a series of banks reportedly interested in acquiring Turkey's Denizbank. Chris Whiteoak / The National
Emirates NBD has confirmed it is one of a series of banks reportedly interested in acquiring Turkey's Denizbank. Chris Whiteoak / The National

Shares in Emirates NBD soared to a two-year high yesterday, after it confirmed it was in talks to acquire a majority stake in Turkish lender DenizBank from Sberbank of Russia.

"Discussions are at a very preliminary stage and there is no certainty that any transaction will be entered into," Emirates NBD, Dubai's biggest bank by assets, said in a statement on Tuesday.

"Emirates NBD routinely evaluates potential opportunities in different markets. A further announcement will only be made if there is a material development."

Emirates NBD shares surged on the news, closing up 6.5 per cent at Dh9, their highest one-day rise since January 2016.

Banks from the GCC and China have expressed interest in DenizBank, sources told Reuters on Monday. Shares in the Turkish bank rose 20 per cent on Tuesday, hitting a three and half year high, after gaining 14 per cent on Monday.

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Earlier this month Emirates NBD's vice chairman and managing director Hesham Al Qassim said the bank planned to open a representative office in Turkey in 2018 "to better support our customer network".

The bank plans to expand its network in Egypt and Saudi Arabia as part of its international growth plans for the year.

“Emirates NBD have talked in the past about the need to be in the UAE, Saudi Arabia, Egypt and Turkey to be a proper regional bank,” said Sanyalak Manibhandu, head of research at NBAD Securities. “They’re in three out of four of those markets already, so this isn’t unexpected.”

Banks from the Arabian Gulf that had bought into Turkey include the National Bank of Kuwait.

Such acquisitions have often struggled to turn a profit for their new owners.

“Turkey is a difficult market to make money from,” said Mr Manibhandu.

“Banks from the Gulf going into the country have faced headwinds in terms of loan quality and exchange rates. Emerging markets currencies are strong right now against the dollar so it may be a good year to go in, but the headwinds others have faced will still blow across any new entrants."

DenizBank is Turkey's 15th largest bank by assets, according to data compiled by Bloomberg.

Sberbank acquired a 99.9 per cent stake in DenizBank, the Turkish unit of Franco-Belgian bank Dexia, for $3.5 billion in 2012, after the latter's demise following the 2011 European sovereign debt crisis.