Qatar National Bank SAQ agreed to buy National Bank of Greece SA’s Turkish unit for 2.75 billion euros ($3 billion) in cash as it seeks expansion throughout the Middle East and Africa.
The Qatari lender is acquiring NBG’s 99.8 percent stake in Finansbank AS and 29.9 percent of Finans Leasing in a deal that will also see it take on $910 million of subordinated debt, the Athens-based bank said in an e-mailed statement Tuesday. QNB, as it’s known, is paying slightly below book value for the Istanbul-based lender, according to analysts including Kazim Andac at Deutsche Bank. Turkey’s banking index is trading at about 0.89 times book.
The acquisition strengthens QNB’s ambitions in the Middle East and Africa, where it’s expanding because of limited opportunities in a home market of just 2 million people. In 2012, it agreed to buy a 77.2 percent stake in Societe Generale SA’s Egypt unit for $1.97 billion and last September became Togo-based pan-African lender Ecobank Transnational Inc’s. largest shareholder after boosting its stake to about 24 percent.
"Book value is a generous price, in current market conditions, given that Finansbank’s return on equity is well below the cost of capital," said Akin Tuzun, an analyst at VTB Capital in Istanbul. "QNB was the only major candidate who could justify some premium."
NBG bought Finansbank for the equivalent of $5 billion in 2006 in what was then Turkey’s biggest-ever banking deal. While Finansbank has been responsible for driving NBG’s profits, the Greek lender agreed to sell its stake to comply with conditions of a European Union bailout.
NBG’s initial plan to reduce its holding in Finans to 60 percent through a share offering faced repeated delays amid a turbulent series of elections that shook capital markets in both Turkey and Greece. It said last month it would sell the entire stake after a change in management earlier this year.
State-controlled QNB will finance the purchase with its own funds and remain "strongly capitalized" after the acquisition, the bank said. In 2012, the Doha-based bank lost out to Russian lender OAO Sberbank in a contest for Turkey’s Denizbank. QNB is seeking to become “a Middle East and Africa icon by 2017 and a leading global bank by 2030," Chief Executive Officer Ali Ahmed Al-Kuwari said in a separate statement.
The deal has been approved by the board of directors of both banks and the General Council of the Hellenic Financial Stability Fund. It’s still subject to regulatory approvals, and is expected to close in the first half of 2016, both parties said.
Finansbank’s share price has more than doubled over the last 12 months, on speculation that a deal was imminent. The 0.02 percent that is listed on the Istanbul stock exchange surged as much as 17.1 percent further this morning, to as much as 6.85 liras ($2.35) a share.