Emirates NBD’s Takeover Bid for Turkish Denizbank is Almost a Done Deal

After Intense lobbying by Denizbank to convince President Tayyip Erdogan of the benefits of the potential $5.3 billion deal, Emirates NBD could agree to buy the Turkish bank within weeks.

Emirates NBD, the biggest bank in Dubai said it was in preliminary talks to buy the Turkish bank from Sberbank of Russia in January, the plan however has met resistance from Erdogan.

Although President Erdogan does not have direct control over Turkey’s banks, the president could however block any potential deal by telling BDDK, the country’s banking watchdog not to approve it. It illustrates the president’s important role in sealing major deals in Turkey, after repeated efforts by chief executive of Denizbank to persuade President Erdogan of the case for the takeover. The deal however still requires approval from BDDK, and the deal is expected to be agreed in the next few weeks. The BDDK declined any request to comment.

A senior official in Ankara said that he is not saying this deal will fall through, but it would not be realistic to say these developments are supportive of the negotiations.

Denizbank, Sberbank and Emirates NBD all did not respond to requests to comment, as did Erdogan’s office.

Hakan Ates, The Chief Executive Officer of Denizbank has met Erdogan and other senior officails in Ankara over the past month in an attempt to convince them that the deal would be positive for the banking system of the country.

By assets, Denizbank is the 9th largest lender in Turkey, making it a relatively small player in a market that is growing fast. Sberbank, which is selling Denizbank as part of a broader regional strategy shift, in 2012 paid around $3.5 billion for the bank.

Shares in Denizbank have improved about 70% this year, aided by news of the talks, giving it a $5.3 billion market value.

As part of its international expansion, Emirates NBD, which in the past acquired BNP Paribas’ Egyptian business, has for several years been scouting for opportunities in the Turkish banking sector as part of its international expansion strategy.

In terms of assets, Emirates NBD is one of the largest banking groups in the Middle East. The company was established on October 16, 2007, when Emirates NBD’s shares were legitimately listed on the Dubai Financial Market.

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