Sberbank Said to Buy Dexia Unit Denizbank for $3.6 Billion

Sberbank Said to Buy Dexia Unit Denizbank for $3.6 Billion
Sberbank entered into exclusive negotiations with Dexia on May 24 to acquire the entire stake in Denizbank. Photographer: Kerem Uzel/Bloomberg

OAO Sberbank of Russia, Eastern Europe’s largest lender, bought Dexia SA’s Turkish unit Denizbank AS for about $3.6 billion (2.9 billion euros), three people with direct knowledge of the matter said.

Franco-Belgian Dexia and Sberbank agreed on the transaction today during talks in Istanbul, where Denizbank is based, said the people, who declined to be identified because the process is confidential.

Sberbank is the first Russian lender to buy a bank in Turkey, joining HSBC Holdings Plc, UniCredit SpA and Citigroup Inc. in a country where the economy expanded 8.5 percent last year. The deal would be the largest in Eastern Europe, the Middle East and Africa this year and the biggest in Turkey since Banco Bilbao Vizcaya Argentaria SA bought 24.9 percent of Turkiye Garanti Bankasi AS for $5.8 billion in March last year.

Dexia and Sberbank will announce the results of the talks tomorrow, Denizbank said in a filing with the Istanbul Stock Exchange today. Alexander Baziyan, a spokesman for Sberbank, declined comment. Benoit Gausseron, a spokesman for Dexia, didn’t answer two phone calls to his mobile seeking comment.

“The sale is very positive for the Turkish banking industry because now investors can start focusing on other Turkish banks as well,” Haluk Akdogan, London-based analyst at ING Groep NV, said in a telephone interview today. “The valuation is very good from Dexia’s point of view.”

Bank Values

The sale price of $3.6 billion corresponds to 1.33 times Denizbank’s book value, according to data compiled by Bloomberg. Dexia paid Turkish businessman Ahmet Nazif Zorlu and minority shareholders $3.1 billion for 96 percent of Denizbank in 2006.

Turkiye Garanti, the biggest listed bank by market value in Turkey, trades at 1.39 times book value. Akbank TAS, part-owned by Citigroup Inc., has a price to book ratio of 1.24. Turkiye Is Bankasi AS, the country’s biggest bank by assets, trades at 0.95 times book.

Denizbank rose 0.9 percent to 11.75 liras at 5 p.m. in Istanbul. Less than 0.2 percent of Denizbank’s shares trade on the exchange. Dexia dropped 6.3 percent to 15 euro cents in Brussels. Sberbank rose 2.7 percent to 2.515 rubles in Moscow.

Growth Plans

Sberbank is seeking growth opportunities outside of the former Soviet Union as some western European lenders sell their subsidiaries in Eastern Europe to comply with capital rules or state aid conditions. It bought most of Oesterreichische Volksbanken AG’s eastern European business for 505 million euros in February as a platform for expanding in the region.

Dexia, based in Paris and Brussels, put Denizbank up for sale as part of a rescue plan imposed by the French and Belgian governments when the debt crisis eroded its ability to obtain funding. The Denizbank sale would have a positive impact on Dexia’s creditworthiness, Moody’s Investors Service said May 28.

Net income at Denizbank more than tripled to 423.1 million liras ($232 million) in the first quarter, according to a stock exchange filing on May 8. The lender had deposits of 23.1 billion liras at the end of March. Loans were 23.4 billion liras and assets 38 billion liras.

Profit in Turkey’s banking industry climbed an annual 11 percent to 7.66 billion liras ($4.2 billion) in the first four months, the bank regulator in Ankara said on June 6.

Sberbank entered into exclusive negotiations with Dexia to buy Denizbank on May 24. Sberbank’s advisers were Deutsche Bank AG, Rothschild and Troika Diolog, while Dexia’s adviser was Bank of America Merrill Lynch, the people said.

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