Garanti Says Parent BBVA May Seek to Boost Turkey Investment

  • BBVA last week expressed confidence in Garanti’s potential
  • Garanti says it’s best-performing BBVA unit in first 9 months

Garanti Bank said its top shareholder, Spain’s Banco Bilbao Vizcaya Argentaria SA, is interested in boosting its investment in Turkey.

Ali Fuat Erbil, chief executive officer of Turkey’s largest bank by market value, said that the Spanish lender, which owns about a 40 percent stake in Garanti Bank, has expressed its intention to increase its investment in the country “if the opportunity arises,” without being more specific. Garanti is BBVA’s best-performing unit in the countries where it operates, based on nine-month results, Erbil said at a press conference in Istanbul on Wednesday.

BBVA, which also operates in Mexico, Asia, the U.S. and several South American markets through units and affiliates, boosted its stake to nearly 40 percent after agreeing to buy almost 15 percent of Garanti Bank -- known more formally as Turkiye Garanti Bankasi AS -- from sellers including billionaire Ferit Sahenk and his company Dogus Holding AS almost two years ago. Dogus holds a further 6.2 percent at Garanti, according to Bloomberg data.

During its earnings call last week, BBVA said that while it was “fully committed” to its investment in Garanti Bank, it had no plans to change its stake “in the near future” because of the bank’s size and the weight it already has in BBVA’s allocation of capital at the group level. A BBVA spokeswoman on Wednesday referred to the comments made last week.

“BBVA has invested about $7 billion in Garanti so far, making them one of the top international investors in Turkey,” Erbil said. “They have expressed their intention to increase their investment if the opportunity arises, but there’s nothing specific at the moment.”

Shares Fall

Garanti fell as much as 0.6 percent to 8.19 liras in Istanbul,in second day of falling streak.

The lender cut rates on loans to small companies and consumers -- including mortgages -- for the second time in three months as part of a move by Turkish banks this week to spur growth after President Recep Tayyip Erdogan called on lenders to ease borrowing costs in August. Prime Minister Binali Yildirim, who met bank executives and officials from the banking regulator in Ankara Tuesday, urged them to support growth through financing investments and “keep the economy more lively,” according to a statement from his office.

Erbil said he expected Turkish banks’ loanbooks to grow as much as 13 percent this year and 15 percent in 2017. Garanti will continue to finance energy projects in 2017, especially in renewable energy such as wind and solar, he said.

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