Dubai: Emirates NBD’s acquisition of Turkey’s Denizbank is expected to help both parties, allowing the latter to avail of lower cost of funds and allowing the Dubai bank to grow its presence internationally.
Emirates NBD on Wednesday said in a statement it has revised its deal to acquire 99.85 per cent of Denizbank, with the value of the deal now at $2.75 billion (Dh10.10 billion) instead of the earlier announced $3.2 billion.
The deal is expected to be completed by the end of the second quarter of this year, the bank said, as analysts said they expect Denizbank to account for around 15 per cent of Emirates NBD’s net profit for 2019.
Vrajesh Bhandari, portfolio manager at Al Mal Capital in Dubai, said that with better optimisation of capital, Emirates NBD should see a higher return on equity of around 1 per cent, and an earnings-per-share accretion of up to 4 per cent.
He added that Turkey has favourable demographics, with a population of 80 million people.
“Credit penetration is low, and therefore, the market offers better growth prospects. We believe the price revision largely addresses the risks,” Bhandari said.
Aarthi Chandrasekaran, vice president of asset management at Shuaa Capital, agreed with that view, saying that over 40 per cent of Turkey’s population is underbanked, while in the UAE growth is saturated.
“Turkey and Egypt are the go-to places for the banks in the GCC for acquisitions. The Turkish economy has a vibrant, young, and rapidly growing population, and a geographical proximity makes it an attractive market for merger and acquisition transactions for the GCC banks,” she said.
In May, when the deal was first sealed, the bank said the transaction will allow it to establish itself as a leading bank in the Middle East and North Africa and Turkey region, and achieve “meaningful diversification of its operations, both in new countries and in a broad range of new segments.”