UAE-based Emirates NBD, a leading bank in the region, and Sberbank of Russia have entered into an agreement whereby Sberbank will sell its entire 99.85 per cent stake in Turkey-based private bank Denizbank to Emirates NBD.

Upon closing of the transaction, Sberbank will cease to be a shareholder in Denizbank.

In accordance with the signed agreement, the consideration for 99.85 per cent equals Turkish Lira (TRY) 14.6 billion under a locked box mechanism, based on consolidated equity capital of Denizbank as of October 31, 2017.

In addition, Emirates NBD will pay interest on the consideration for the period between October 31, 2017 and the transaction closing date. All profits from the locked box date till closing date will be to Emirates NBD’s account. As part of the transaction, and on closing, Emirates NBD will assume ownership of Denizbank’s subordinated debt previously provided by Sberbank.

The transaction is expected to close in 2018.

Denizbank, headquartered in Turkey, is the fifth largest private bank in the country, with assets of TRY169.4 billion ($36.2 billion), loans to customers amounting to TRY119.2 billion, deposits amounting to TRY115.7 billion as on March 31, 2018. The bank operates through a network of 751 branches, with 708 branches in Turkey and 43 in other territories (Austria, Germany, Bahrain, Moscow and Cyprus), servicing around 11.8 million customers, through almost 14,100 employees and 5,900 ATMs.

“Denizbank is one of the most attractive assets in the Turkish banking sector. We highly value the management team and the results achieved during our ownership of Denizbank since 2012. The decision to sell Denizbank is prompted by a change in Sberbank Group’s international strategy and will allow us to focus further on development of ecosystem of Sberbank,” said Herman Gref, CEO of Sberbank.

“Through this transaction, Emirates NBD will establish itself as a leading bank in the Middle East, North Africa and Turkey (MENAT) region and achieve meaningful diversification of its operations, both in new countries and in a broad range of business segments,” said Hesham Abdulla Al Qassim, vice chairman and managing director, Emirates NBD.

He further stated that Emirates NBD supports Denizbank’s proven strategy to achieve sustained and profitable growth in its established markets and operating segments, by adequately leveraging its strong and experienced local management and market leading digital capabilities.

Shayne Nelson, Group CEO, Emirates NBD said: “The transaction represents a significant milestone for Emirates NBD and is expected to be accretive to shareholders in the first year. Denizbank is a well-managed and prominent organization in the Turkish banking market, which with the current deal structure, comes at a reasonable price on acquisition for Emirates NBD.”

Denizbank equity capital amounts to TRY13.7 billion as of March 31, 2018.Emirates NBD will increase its international presence to 13 markets and international assets will exceed 30 per cent of the consolidated post acquisition balance sheet. – TradeArabia News Service