Sberbank signed an agreement to sell 99.58% of its Turkish subsidiary Denizbank A. S. Emirates NBD bank. Sberbank will cease being a shareholder in Denizbank after the transaction is closed.
A binding sale agreement between Russian and UAE banks has already been announced. The deal is awaiting regulatory approval in Turkey, Russia, the United Arab Emirates and other countries, where the fifth largest foreign bank SB operates.
Reasons for selling
The key role in the deal belongs to the lobbying talents of the Turkish subsidiary of the Security Council. BDDK, the Turkish regulator, was also initially opposed to the deal.
But the president will be able to change his position. This Denizbank management managed to convince Erdogan of the expediency of the agreement despite the constantly growing tensions between the Gulf countries and Turkey.
The sale is associated with changes in the international development strategy of the SB group. The action will focus on the development of the bank's ecosystem in Russia. Due to the devaluation of the Turkish lira, the profitability of banks is decreasing. Therefore, it is more profitable to sell the asset now.
Another reason for parting with "daughter" is called anti-Russian sanctions. Due to restrictive measures, the competitiveness of a Russian bank in Turkey has noticeably dropped. We managed to get the institution out of the US sanctions. But, finding itself under European sanctions, Denizbank lost its competitiveness in the domestic market.
Implementation at a profit will increase the financial performance of the SB. Capital repatriation will provide additional resources to increase the rate of economic growth of the country. Substantial resources after the transaction will be effectively directed to the inflow of investments and the development of the Russian economy.
Benefits from the deal
Both Sberbank and the entire domestic economy will receive positive financial results. Transactions are settled in dollars. The contract provides for an element of hedging, that is, opening a transaction in one market to offset the impact of price risks of an opposite equal position in another market.
It provides for the determination of the exchange rate conversion of the lira to the dollar in a narrow range. It turns out that exchange rate fluctuations will not have a noticeable effect on the total amount. In addition, the cost of the transaction is provided not at the time of closing, but at the time of signing.
The key stage of the negotiations will take place in late 2018 - early 2019. The dates were slightly shifted. Completion was originally planned at the end of the current period. A significant portion of the liquidity from Denizbank will be repatriated.
The buyer, in addition to the purchase price, will receive all loans, the repayment of which cannot be required before the deadline specified in the agreement, in an amount within the range of 1.2 billion dollars. All profits made by the Turkish bank prior to the closing of the deal will go to the UAE.
Sberbank will receive a profit of about $ 20 billion from the sale. Emirates NBD will pay additional interest on the purchase price for the time period from October 31 of last year to the date of the transaction.
