DUBAI: Emirates NBD, Dubai’s biggest bank, has entered into a revised agreement with Sberbank to buy Turkey’s Denizbank, the transaction is expected to be completed by second quarter of 2019.[the_ad id=”31605″]Emirates NBD will pay 15.48 billion Turkish Lira for Sberbank’s wholly-owned Turkish unit, a statement issued to Dubai Financial Market (DFM) said.
The United Arab Emirates’ second-biggest bank is taking the reins at Istanbul-based Denizbank as President Recep Tayyip Erdogan leans on lenders to lower interest rates and reverse a decline in credit to pull the Middle East’s biggest economy out of its first recession in a decade. It also comes as financial institutions face a rising pile of bad debts and restructuring demands from companies struggling to repay loans denominated in foreign currencies.
The lira lost 17 per cent against the dollar since the deal was signed, plumbing a record low in August, amid tensions with the US and increasing signs the economy was fraying. The currency’s crash has fueled inflation of almost 20 per cent that is cutting into disposable income. The deteriorating climate is likely to undermine banks’ asset quality, raising the risk that the public sector will be called on to support parts of the domestic corporate and banking system, S&P Global said last month.
Still, Gulf-based lenders are attracted to Turkey with its young and under-banked population of more than 80 million people – dynamics they can’t find domestically, where expansion opportunities are limited.